Petition for Writ of Certiorari — Air Line Pilots Ass'n v. Landry

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IN THE -

Supreme Court of the United States

OCTOBER TERM, 1989

Air LINE PILOTS ASSOCIATION, INTERNATIONAL, AFL-CIO

and CHARLES J. HUTTINGER,

_ Petitioners,

FRANK LANDRY, et al.,

Responder ts.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

STEPHEN B. MOLDOF

Counsel of Record

ANN E. 0’SHEA

MICHAEL L. WINSTON

THOMAS N. CIANTRA

COHEN, WEISS AND SIMON

330 West 42nd Street

New York, New York 10036

(212) 563-4100

Attorneys for Petitioners

Air Line Pilots Association,

International, AFL-CIO and

Charles J. Huttinger

WIL@ON - Epgs PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

QUESTIONS PRESENTED FOR REVIEW

1. Whether RICO and state law rather than federal

law can govern a challenge to union and employer conduct

in collective bargaining and related to a retirement plan

simply because a plaintiff alleges that conduct subject

to the duty of fair representation and ERISA violates

RICO?

2. Whether the threat of continuing racketeering

activity may be established by the unsubstantiated allega-

tions of different plaintiffs in a different RICO complaint

against the same defendant, and by one defendant’s con-

tinuing receipt of benefits ailegedly derived from a RICO

scheme which “briefly flourished and faded” years before?

3. Whether ERISA fiduciary obligations can be im-

posed before an ERISA plan has been “established” merely

because the plan includes a retroactive effective date?

(i)

LIST OF PARTIES TO THE PROCEEDINGS

The Air Line Pilots Association, International, AFL-

CIO and Charles J. Huttinger were defendants in the

district court, appellees in the court of appeals and are

petitioners in this Court.

TACA International Airlines, S.A. was a defendant in

the district court, an appellee in the court of appeals and

is a respondent in this Court.

Fringe Benefit Administrators, Ltd. was a defendant

in the district court, an intervenor in the court of appeals

and is a respondent in this Court.

The plaintiffs in the district court, appellants in the

court of appeals and respondents in this Court, are:

Frank Landry, Jules Corona, Charles South, Robert A.

Massa, Don Johnson, T.Q. Howard, Joe Hass, Walter

Keller, Don Jenkins, Emile Cerisier, and M. Letona. The

following were plaintiffs in the district court but were not

appellants in the court of appeals and are not respondents

in this Court: Thomas Brignac, Robert Lukenbill, Bert

Haffner, and Gary Zyriek.

TABLE OF CONTENTS

QUESTIONS PRESENTED .20000022.......-scscecceecsessesseens

LIST OF PARTIES TO THE PROCEEDINGS ............

TABLE OF AUTHORITIES |... sata

i Ee

i a acieeebntetebocuniestal

Eh a

REASONS FOR GRANTING THE WRIT....................

I. THE APPLICATION OF RICO, STATE COM-

MON LAW AND EXPANDED CRIMINAL

SANCTIONS TO UNION CONDUCT IN COL-

LECTIVE BARGAINING AND RELATED TO

RETIREMENT PLANS DIRECTLY CON-

FLICTS WITH FUNDAMENTAL FEDERAL

LABOR LAW POLICY AND DECISIONS OF

THIS COURT AND OTHER CIRCUITS AND

PRESENTS AN ISSUE OF COMPELLING

IMPORTANCE WARRANTING THIS

a onc scensisestncesaatdileddeecanctbisiiiannatete

A. Application of State Common Law Stand-

ards And Vicarious Liability Doctrine To

Union Collective Bargaining Conduct ............

B. Application of State Common Law to Matters

Related to ERISA Retirement Plans...............

C. Extension of Criminal Statutes to Labor Con-

duct Not Criminalized by Congress ................

(iii)

oo Fy, FF SO HO NW NW K A

TABLE CF CONTENTS—Continued

Il. THE DECISION OF THE COURT BELOW

WITH RESPECT TO THE RICO “CONTINU-

ITY” REQUIREMENT IS IN CONFLICT

WITH RICO DECISIONS OF THIS COURT

AND OF OTHER CIRCUITS AND WITH THIS

COURT’S DECISIONS REGARDING SUM-

MARY JUDGMENT EVIDENTIARY RE-

QUIREMENTS ....................... .

Ill. THE DECISION BELOW, BY IMPOSING

ERISA FIDUCIARY OBLIGATIONS PRIOR

TO THE TIME A RETIREMENT PLAN IS

ESTABLISHED, CREATES A SPLIT IN THE

CIRCUITS AND SIGNIFICANT ADVERSE

CONSEQUENCES FOR RETIREMENT

PLANS, EMPLOYEES AND BENEFICI-

ARIES, WHICH MERIT THIS COURT'S

SP ENEEET sinicsisnicnsescscccnesistcstinaneesnanieenieetinaitonibianiasiine

CGI contnsenceensensenseeevisnrnenitemmmnesinnnnnnniininiaiateamnennss

APPENDIX A: Opinion of the Court of Appeals, dated

RRR ae a Sr rn

APPENDIX B: Judgment of the Court of Appeals,

I Gils HII nicinisiccinssitnsinshscpetisesonnnciasdahthersecemnens

APPENDIX C: Opinion of the District Court, dated

I is I ioe ccc alee inner inate

APPENDIX D: Minute Order of the District Court,

ee I RP IT isis itieeenntinitinailendahsasatinentilinks

APPENDIX E: Minvte Order of the District Court,

Sie BIT’ eaiinsesencnintipinniicnnpentaniidiieninbiadelietaes

APPENDIX F: Judgment of the District Court, dated

i IE daebertcsineeila bicisicinihbicabbisicensitriaeaaettatcaeacenis

APPENDIX G: Judgment of the District Court, dated

8 RS ee ee ae a

APPENDIX H: Opinion of the Court of Appeals on

Petition for Rehearing, dated April 27, 1990 .............

APPENDIX I: Opinion of the Court of Appeals on

Petition for Rehearing, dated April 27, 1990 .............

APPENDIX J: Statutory Provisions ...........000...000.0......

Page

TABLE OF AUTHORITIES

CASES Page

Adair Vv. Air Line Pilots Ass’n, Int'l, 86-C-1939 (D.

PD RE ee 22

Adams Vv. General Tire & Rubber Co., 794 F.2d 164

CE Gs TTI increcstsetcietcentitintntenntasianteneadnendameietins 26

Air Line Pilots Ass'n, Int’l vy. TACA Int'l Airlines,

S.A., 748 F.2d 965 (5th Cir. 1984), cert. denied,

ef Sf ee eee 3

Alexander v. Gardner-Denver Co., 415 U.S. 36

COD sxeresnccicsisieninsicliniiinianahisegun tienes teenie ee iaane 15

Anderson Vv. Liberty Lobby, Inc., 477 U.S. 242

CITED axccecsssnsensnncthiesimabseisaedianidesabmnibeiipsiaaaataiemanie 22

Atchison, T. & S.F. Ry. v. Buell, 480 U.S. 557

CIID cniccricitentntehscenictichieniiaisiitisaneniiiaiissinie tie ae ada 15

Bausch & Lomb, Inc. v. Smith, 630 F.Supp. 262

CUE as te TEED ccinnnicccniisiicisidsaiidiadimeiasmasi mea 25

Bingham vy. Zolt, 683 F.Supp. 965 (S.D.N.Y.

SEED cccsiunsescsssegniiaubemnietisissinnentdnilalacshh cage as 23

Brotherhood cf R.R. Trainmen V. Jacksonville Ter-

minal Co., 394 U.S. 369 (1969) ..........222.0.........2.2---. 11

Brown V. Keystone Consol. Indus., 680 F.Supp.

a Cy Fes I eiiccbeciintadeneateclindcdansdesesetnataens 20

Butchers Union Local 498 vy. SDC Investment, Inc.,

631 F. Supp. 1001 (E.D. Cal. 1986) 02... 18, 20

Celotex Corp. v. Catrett, 477 U.S. 317 (1986)........ 22

Chicago & N.W. Ry. v. United Transp. Union, 402

BF. | ree Pen ene eee 11

Colella v. United States, 360 F.2d 792 (1st Cir.),

cert. denied, 385 U.S. 829 (1966) ............00. 19

Condon V. Locai 2944, United Steelworkers, 683

FB Sr Ce Ga ee cncettoeinaiksenstiabictictnies 13

Czosek Vv. O’Mara, 397 U-S. 25 (1970) 0.0000. 12,14

DelCostello Vv. International Bhd. of Teamsters, 462

CF 8 RnR wee. 12, 14, 16

Detroit & T.S.L.R.R. v. United Transp. Union, 396

cf S §. ERAS R ee ee 10-11

Dodd v. John Hancock Mutual Life Ins. Co., 688

F.Supp. 564 (E.D. Cal. 1988) ................00..222....2000 25

Donovan V. Dillingham, 688 F.2d 1367 (11th Cir.

TABLE OF AUTHORITIES—Continued

Page

Dowling V. United States, 473 U.S. 207 (1985). 17

Eastern Pub. and Advertising, Inc. v. Chesapeake

Pub. and Advertising, Inc., 896 F.2d 971 (4th

Cir. 1990) a senenntnsmniienes 23

Ed Miniat, Ine. v. Globe Life Ina. Group, Inc., 805

F.2d 732 (7th Cir. 1986), cert. denied, 482 U.S.

915 (1987) 25

Emporium Capwell Co. v. Western Addition Com-

munity Org., 420 U.S. 50 (1975) . ll

Evangelista v. Inlandboatmens’ Union of the Pee.,

777 F.2d 1390 (9th Cir. 1985) 13

Farlow Vv. Union Cent. Life Ins. Co., 874 F.2d 791

(11th Cir. 1989) 17

Farmer Vv. United Bhd. of Carpenters, 430 US. 290

(1977)... i 15

Firet Nat'l Bank of ‘Am. ¥. “Cities Sere. Co., 391

U.S. 253 (1968) 22

Foltz v. US. News & World Report, Ine., 627

F.Supp. 1143 (D.D.C. 1986) 17

Ferd Motor Co. v. Huffman, 345 US. 330 (1953) .. 11

Fort Halifaz Packing Co. v. Coyne, 482 US. 1

(1987) . 25

Gerred V. General Am. ‘Life Ine. Co., 723 F.Supp.

1325 (W.D.Ark. 1989) noma 25

Harris v. Arkansas Book Co., 794 F.2d 358 (8th

1S aN ES 25

H.J. Inc. ¥. Northwestern Bell. Tel. Co., 109 S. Ct.

2893 (1989) . oe SF

Holmberg Vv. Armbrecht, 327 US. 392 (1946) hinishen 12

International Ass'n of Machinists v. Street, 367

U.S. 740 (1961). punatiadinintisiasndinendetmeesiateane ie comet ll

International Bhd. of Elec. Workers Vv. Foust, 442

U.S. 42 (1979)... -ewl2, 13, 14, 16, 18

Johnson V. United Food & Commercial Workers

Union, Local 23, 828 F.2d 961 (3d Cir. 1987). 13

Jones V. Truck Drivers Local Union No. 299, 838

F.2d 856 (6th Cir. dae: cert. denied, 110 S.Ct.

404 (1989) ciel ~

. 13,14

vil

TABLE OF AUTHORITIES—Continued

Lee v¥. Republic Airlines, Inc., 134 L.R.R.M.

(BNA) 2165 (9th Cir. 1990) —..... SS

Lee ¥. E.1. DuPont de Nemours & Co., 894 F.2d 755

(5th Cir. 1990) ee eres aE

Lewis v. Local Union 100, Laborers’ Int’l Union,

750 F.2d 1368 (7th Cir. 1984) .

Local 20, Teamsters V. Morton, “377 us. 252

(1964)... —_

Moarks V. Pannell Kerr Forster, 811 F2a 1108 (7th

> x

Massachusetts Mut. Life Ine. Co. v. Russell, 473

U.S. 134 (1985) ... ‘

Maynard v. Revere Copper ‘Prod., “113 F2d 733

| | Pr

Metropolitan Life Ins. Co. ¥. Teylor, 481 US. 58

(1987)........

MHC, Ine. V. United Mine ‘Workers, 685 F Supp.

GQ GQ OO ———————————————————EE

Moss V. Morgan Stanley, Inc., 719 F.2d 5 (2d Cir.

1983), cert. denied, 465 U.S. 1025 (1984) ..

NLRB v. Amar Coal Co., 453 U.S. 322 (1981)

Northwest Airlines, Inc. Vv. Transport Workers

Union, 451 U.S. 77 (1981) aeimeiaian

Occupational-Urgent Care Health Sys., Ine. V.

Sutro & Co., 711 F.Supp. 1016 (E.D. Cal. 1989) ..

Ogden ¥. Michigan Bell Tel. Co., 571 F.Supp. 520

SEE

Parr ¥. United States, 363 U.S. 370 (1960) ove

Peterson V¥. Airline Pilote Ass'n, Int'l, 759 F.2d

1161 (4th Cir.), cert. denied, 474 US. 946

OEE

Phelps ¥. Wichita Eagle-Beacon, 886 F.2d 1262

(10th Cir. 1989)

Phillips Vv. Amoco Oil Co., 799 F.2d 1464 (11th Cir.

1986)

Phillips V. Osborne, 403 F.2d 826 (9th Cir. 1968) .

Pilot Life Ins. Co. ¥. Dedeaux, 481 U.S. 41 (1987) .. 16, 17,

Pitre v. Lowisiana Health Serv. and Indem. Co., 122

PEE. Cae Cit EO, TREO cee

viii

TABLE OF AUTHORITIES—Continued

Quinn v. DiGiulian, 739 F.2d 637 (D.C. Cir. 1984) ..

Ramsey v. United Mine Workers, 401 U.S. 302

(1971) ... i

Rasmussen. Yv. ~ Metropolitan “Life Ins. Co., 675

F.Supp. 1497 (W.D. La. 1987) .........................

Richardson Vv. Umted Steelworkers, 864 F.2d 1162

(5th Cir. 1989), cert. denied, 58 U.S.L.W. 3736

CUD, Bilaay GR, BODO D ccccccccccsssccssccnessessssccssssnsssssssssses

Ris v. Bedell, 699 F.Supp. 429 (S.D.N.Y. 1988) .....

Rollo v. Maxicare of Louisiana, Inc., 695 F.Supp.

Ruby v. TACA Int'l Airlines, S.A., 439 F.2d 1359

DR yy ————————————7~

San Diego Bldg. Trades Council v. Garmon, 359

Scott v. Gulf Oil Corp., 754 F.2d 1499 (9th Cir.

ST conciestenstnshcctnsiccentnenipenantinateaiiniiaeisennainetganiatants =

Sedima, SPRL. v. Imrez Co., 473 US. 479

Shaw V. Delta Airlines, Inc., 463 U.S. 85 (1983) ..

Steele v. Louisville & N. R.R., 323 U.S. 192 (1944) ..

Sutherland v. O'Malley, 882 F.2d 1196 (7th Cir.

BI necexnstsinrinsiinneenitasnstianssnasistieenatinsinapatieneatnaiiatiisesaees

Sutton Vv. Weirton Steel Div. of Nat'l Steel Corp.,

567 F.Supp. 1184 (N.D. W.Va.), aff'd, 724 F.2d

406 (4th Cir. 1983), cert. denied, 467 U.S. 1205

Switchmens Union V. National Mediation Board,

I yyyy—————————————

Texas Industries, Inc. Vv. Radcliff Materials, 451

UMWA Health & Retirement Funds v. Robinson,

([( F ( xxx

United Bhd. of Carpenters Vv. United States, 330

ee GD CI cctrccennecncpnsnesnnsnenernnensienttanensnesnnesness

United Ind. Flight Officers, Inc. v. United Air

Lines, Inc., 756 F.2d 1274 (7th Cir. 1985) ..........

''nited Mine Workers v. Gibbs, 383 U.S. 715

Page

12-13

-_-— —————

TABLE OF AUTHORITIES—Continued

Page

United Parcel Serv., Inc. v. Mitchell, 459 U.S. 56

RS ee 0 Oe Ss ak ee 12

United States v. Andreen, 628 F.2d 126 (9th Cir.

RE oe a ce ee a 19

United States v. Bass, 404 U. S. 336 (1971)... 17, 19

United States v. DeLaurentis, 491 F.2d 208 ‘(2d

9, Se eee 18

United States v. Marolda, 615 F.2d 867 (9th Cir.

es a RR a aE ee 19

United States v. Stockton, 788 F.2d 210 (4th Cir.),

cert. denied, 479 U.S. 840 (1986)... 19

United States v. Turkette, 452 U.S. 576 (1981)... 23

United States v. Universal C.1.T. Credit Corp., 344

U.S. 218 (1952)... ila 17

United States v. W inston, 558 F.2d 105, (2d Cir.

EE A ee ae eee 18

United Steelworkers Vv. Rawson, U.S. ——, 58

U.S.L.W. 4556 (U.S. May 14, 1990) 11, 12, 14

Vaca V. Sipes, 386 U.S. 171 (1967)... 11, 12, 13, 14

Williams v. United States, 458 U.S. 279 (1982)... 17

STATUTES

Crimes and Criminal Procedure Act

18 U.S.C. § 241 18

18 U.S.C. § 664 5, 8, 18, 19, 20

18 U.S.C. § 1341 5

18 U.S.C. § 1343 | 5

see, si 7,18

LE Eo See aes 18

Racketeer Influenced and Corrupt Organizations

Act

18 U.S.C. § 1961(1) 18, 19

18 U.S.C. § 1962... aa om 21

18 U.S.C. § 1962(b) ; Bao 7

18 U.S.C. § 1962(c) 7

18 U.S.C. § 1964(c) semnniodnieis — 7 14

TABLE OF AUTHORITIES—Continued

Interna! Revenue Code

ae ee irwniettiersntnssnncnceninnniesssnemtainioomn’

26 U.S.C. § 606(e) (1) (A) .............................2..0

Judiciary and Judicial Procedure Act

re Oe GED etictiscetectenscesimtinsecnasenicesanions

Be AE Oe IE ilies ccecncciciscanenresecinocamns Seen

I cseaithais essen ceorctaaasendiennanigenarincanandsiie

I IE Seis chnciccchasiomnadxniacnissactcnnsdecnionsons

Norris-LaGuardia Act

i sh peepee

National Labor Relations Act

Be i My iileiniccssnnccncsnsinecnssmcsomnniiec

Labor Management Relations Act

ww w no

SP Nee BE een iieineshnnnennhctnicbaisncactsienisicisstbiomannnces 3, 5, 7,

Labor-Management Reporting and Disclosure Act

ee I visettisnieeececcaninsseriecsentonamensenace 7, 19,

is Be CO sccsensinsnnccsssanncsanannictonesscedmnenena

Dain cettsccaretsncescteesessonsstessancsnenes 18, 19

Employee Retirement Income Security Act

Se Bae hE arene nc inicennnstintnsnnsnctenssinsesses

BF Oe ID siissiinniccaccsncnsesencesnisersennsoiansnniens

I I rats aa tatbintioandadn-nlcdinedndiuipaensivionentes

BP I I picsatatatis uictnesaintiansaiaionintandeniesiassaeonaies

a Uns We I scsesictistiitnsicanstbunvnchscontenisdasonihitinn

BI EE I II escescasscntcesoscesnsssncenscorneicetioe

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Railway Labor Act

re Oe TI I a atc nececkeisesedthcecceceensnctanccoees

I ra ee I ace cdseiincces eins caciaccdcin

FEDERAL RULES OF CIVIL PROCEDURE

is ea a Mea pac secs vases seas Saeies

LEGISLATIVE MATERIALS

H.R. Rep. No. 998, 87th Cong., Ist Sess. (1961)...

IN THE

Siygwenuw Court of the United States

OCTOBER TERM, 1989

No. ——

AIR LINE PILOTS ASSOCIATION, INTERNATIONAL, AFL-CIO

and CHARLES J. HUTTINGER,

. Petitioners,

FRANK LANDRY, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

The Air Line Pilots Association, International and

Charles J. Huttinger petition this Court to issue a writ

of certiorari to the United States Court of Appeals for

the Fifth Circuit to review the judgment in Landry, et al.

v. Air Line Pilots Ass’n, Int’l., et al., No. 88-3363 (5th

Cir. Jan. 31, 1990), modified, April 27, 1990.

OPINIONS BELOW

The opinion of the court of appeals, which has not yet

been officially reported, is reproduced at App. A.t| The

unreported opinions of the court of appeals on petitions

for rehearing are reproduced at App. H and App. I. The

unreported opinions of the United States District Court

for the Eastern District of Louisiana are reproduced at

App. C through App. E.

1 “App. ” refers to the appendix annexed to this petition.

“R. ” refers to the record on appeal.

JURISDICTION

The opinion and judgment of the court of appeals were

entered on January 31, 1990. Timely petitions for re-

hearing were granted in part and denied in part on April

27, 1990. This Court’s jurisdiction is invoked pursuant

to 28 U.S.C. § 1254(1).

STATUTES INVOLVED

Set out in App. J are the relevant portions of the Rail-

way Labor Act (“RLA”), 45 U.S.C. § 151 et seq., the

Employee Retirement Income Security Act (“ERISA’”’),

29 U.S.C. § 1001 et seqg., the Internal Revenue Code, 26

U.S.C. § 1 et seg., the Racketeer Influenced and Corrupt

Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq.,

and of the following RICO predicate act statutes: 18

U.S.C. § 664, 18 U.S.C. § 1341, 18 U.S.C. § 13438, 18

U.S.C. § 1951, 29 U.S.C. § 186 and 29 U.S.C. § 501(c).

STATEMENT OF THE CASE

The underlying dispute grows out of negotiations be-

tween TACA International Airlines, S.A. (“TACA”), an

air carrier incorporated in El] Salvador, and the Air Line

Pilots Association, International (“ALPA’’), the bargain-

ing representative of TACA’s pilots. Those negotiations

resulted in a collective bargaining agreement which, inter

alia, permitted TACA to relocate its pilot base from New

Orleans to El Salvador. Plaintiffs below, former TACA

pilots, contend that TACA and ALPA negotiated the col-

lective bargaining agreement to further their own needs

at plaintiffs’ expense. The original complaint was cast

as a typical “hybrid” labor law claim, charging that

ALPA breached its duty of fair representation (“DFR”)

and that TACA breached the pre-existing collective bar-

gaining agreement in violation of the RLA. Plaintiffs also

asserted that ALPA, TACA and Fringe Benefit Adminis-

trators, Ltd. (“FBA’), the plan administrator for the

TACA pilots’ retirement plan (the “Plan’), breached

fiduciary duties under ERISA in the implementation and

administration of the Plan. In an amended complaint,

plaintiffs repackaged these claims as RICO violations com-

mitted by TACA, ALPA and Charles J. Huttinger (‘‘Hut-

tinger’”’), an ALPA representative at TACA.?

The Facts

In October 1983, TACA and ALPA commenced nego-

tiations to amend their existing collective bargaining

agreement. Shortly thereafter, TACA attempted to re-

locate its pilot base, terminate the existing agreement,

and withdraw its recognition of ALPA. App. A, 3a.

ALPA filed suit under the RLA. On ALPA’s motion, the

district court enjoined TACA’s conduct, id., as it had

similar TACA actions years before. See Ruby v. TACA

Int'l Airlines, S.A., 489 F.2d 1359 (5th Cir. 1971). The

Fifth ‘Circuit affirmed, but held that TACA could “re

locate its pilot base and effect the other intended steps”

provided that it did so in accordance with the RLA’s bar-

gaining requirements. Air Line Pilots Ass’n, Int'l V.

TACA Int'l Airlines, S.A., 748 F.2d 965, 972 (5th Cir.

1984), cert. denied, 471 U.S. 1100 (1985).

Negotiations continued in 1984 and 1985, assisted by

the National Mediation Board, culminating in a July 24,

1985 “Pilots’ Agreement.” ALPA agreed not to oppose

relocation of the pilot base to El Salvador after August

31, 1985. In return, TACA agreed that its pilots could

elect either to relocate or accept a specified severance

package. The Pilots’ Agreement further provided that

TACA’s obligation to fund the Plan would cease as of

August 31, 1985, which, by the Plan’s terms, would cause

2 Plaintiffs also invoked the District Court’s jurisdiction under

28 U.S.C. §§ 1331, 1332 and 1337, the National Labor Relations Act

(“NLRA”), 29 U.S.C. § 151 et seg., and Section 302 of the Labor

Management Relations Act, 29 U.S.C. § 186.

it to terminate. R.503-05.° A December 17, 1985 “Settle

ment Agreement” between TACA and ALPA resolved all

disputes which had arisen under the Pilots’ Agreement.

Proceedings Below

i. District Court

A year after the Pilots’ Agreement was reached, 15

former TACA pilots, 14 of whom had accepted the sever-

ance option and thereby received over $400,000, App. A,

5a; R.68, 576, filed suit, complaining that the Pilots’

Agreement had been negotiated in breach of ALPA’s

DFR and of the pre-existing collective bargaining agree-

ment. Specifically, plaintiffs claimed that the Pilots’

Agreement was the “result of collusion” in negotiations

between TACA, ALPA and Huttinger in the following

respects: (1) TACA agreed to pay Huttinger undeserved

severance and other benefits and not to sue ALPA for

acts of sabotage against TACA aircraft in order to secure

ALPA’s consent to the pilot base relocation; (2) ALPA

additionally consented to the Pilots’ Agreement to avoid

continued representation of the small, costly TACA bar-

gaining unit; and (3) the TACA pilots were promised

but then denied au opportunity to ratify the Pilots’

Agreement. Plaintiffs further alleged that TACA, ALPA

and FBA violated ERISA by delaying implementation of

the Plan until 1985, failing and refusing to disclose in-

formation about the Plan, and paying Plan benefits to

Huttinger, but not to plaintiffs.

ALPA and TACA filed motions to dismiss or, alter-

natively, for summary judgment, contending that the

DFR/breach of contract claim was barred by the stat-

ute of limitations and that plaintiffs had failed to state

a viable ERISA claim. App. A, 7a.

3In 1982, TACA, pursuant to a February 24, 1982 ALPA-TACA

Letter of Agreement, commenced funding of a future retirement

plan. The Plan was not established until April 18, 1985. R.508.

Mad kA De oh PN AS I heel HO Ts e's

a anche, i tn inc NRE OT NAR a Ate EA SS SNe NEI hsy st

Piaintiffs attempted to side-step the limitations bar in

two ways. First, they sought to have TACA found in

contempt of the 1983 injunction against relocation of the

pilot base. This effort was rejected by the district court

in Landry and by the judge who issued the 1983 injunc-

tion. App. A, 7a. Plaintiffs then amended their com-

plaint for the express purpose of avoiding the limitations

bar to their labor law claim. R. 467. The same activities

earlier asserted to have violated the RLA and ERISA

were repackaged as a RICO claim against ALPA, TACA

and Huttinger, with plaintiffs seeking nearly $100 million

in damages. Plaintiffs claimed that purported mailings

by TACA, ALPA and Huttinger concerning the negotia-

tions and the Pilots’ Agreement constituted mail and

wire fraud in violation of 18 U.S.C. §§ 1341 and 1343,*

and that the provision of pension and severance benefits

to Huttinger constituted bribery or conversion under 29

U.S.C. § 186 and 18 U.S.C. § 664.

In April 1987, the district court dismissed the DFR/

breach of contract claim as time-barred. The ERISA

claim was dismissed as against TACA and ALPA be-

cause plaintiffs had failed to demonstrate that these de-

fendants were fiduciaries with respect to the matters of

which plaintiffs complained.

Thereafter, defendants moved to dismiss or, alterna-

tively, for summary judgment as to the RICO claim.

App. A, 8a. Initially, the court denied the motions with-

out prejudice and ordered plaintiffs to file a RICO Case

Statement, id., detailing their claim.® Defendants re-

newed their motions once that Statement was filed. Jd.

By motion for reconsideration, plaintiffs then sought

to resurrect their dismissed DFR/breach of contract

4The mail and wire fraud allegations are hereafter treated

together as “mail fraud.”

5 While plaintiffs did not further amend their complaint, the RICO

Case Statement added “extortion” as a RICO predicate act.

cliam, id., contending that the court had “overlooked the

doctrine of equitable tolling.” Jd. The court found this

assertion to be “entirely without merit,” App. D, 86a,

and as indicative of the “constantly evolving nature of

plaintiffs’ claims.” R.1118.

Shortly thereafter, the district court dismissed the

RICO claim, App. C, concluding that plaintiffs had failed

to establish the existence of either a RICO enterprise or

RICO predicate offenses. The court additionally noted

“the significant possibility” that plaintiffs’ mail and wire

fraud claims were preempted by federal labor law, but

found it unnecessary to reach this question. App. C, 84a

n.5. While the court felt constrained to follow then-

existing Fifth Circuit precedent on the RICO “pattern”

element, App. C, 8la (subsequently repudiated by this

Court), it found that the alleged racketeering scheme

lacked the requisite “continuity” for a viable RICO claim,

as all alleged acts were directed at a single, short-lived

goal—relocation of the TACA pilot base—which was

achieved long before plaintiffs filed suit. App. C, 84a.

Eleven of the fifteen plaintiffs appealed. App. A, 9a.

ii. Court of Appeals

The court of appeals affirmed dismissal of the DFR/

breach of contract claim on limitations grounds. The

court found no basis for equitable tolling, as plaintiffs

were “on inquiry notice of the labor law claims they

raised in this suit in the spring or summer of 1985.”

App. A, 15a.

With respect to the RICO claim, the court affirmed

the dismissal of TACA but reversed as to ALPA and

Huttinger. The court found that, even though the al-

leged RICO conspiracy “briefly flourished and faded” in

1985, App. A, 59a-60a, a factual dispute existed over

the “continuity” element as to ALPA and Huttinger.

The court held that these defendants may “pose[]ja

threat of continuing harm” based on two considerations:

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nme me, ln iN

et te

(1) that certain pilots employed by Continental Airlines

had filed a separate lawsuit against ALPA making

“much the same allegations as the TACA pilots,” App. A,

43a, and (2) that Huttinger continued to receive retire-

ment benefits, for which ALPA could be vicariously li-

able under 18 U.S.C. §1962(b). App. A, 43a.° The

court ignored the fact that the Continental pilots’ suit

had already been dismissed and did not attempt to ex-

plain how ALPA but not TACA could be held liable for

Huttinger’s receipt of retirement benefits when TACA

was as much a part of the alleged conspiracy as ALPA.

App. A, 33a, 50a-5la. The court further held that the

suit could proceed with ALPA as the RICO enterprise.

With respect to the asserted predicate acts on which

plaintiffs relied, the court affirmed that plaintiffs could

not state a claim under 18 U.S.C. § 1951 or 29 U.S.C.

§ 186. App. A, 44a-47a. The court held that plaintiffs’

RICO claim could proceed on the basis of mail fraud

grounded on the state common law of fraud, App. A,

50a n.87 (even though all the asserted racketeering acts

either related to the Plan, or, as the court found, “oc-

curred or commenced during or grew out of” the bargain-

ing process, App. A, 58a), because the asserted mailings

conceivably contained misrepresentations that “may have

initially lulled the pilots into inaction.” App. A, 5la.’

The court further held that, because defendants had not

demonstrated an absence of breach by Huttinger of any

fiduciary duties under ERISA or 29 U.S.C. § 501(a), his

receipt of retirement benefits could serve as the basis for

® The court held that ALPA could not be both an enterprise and

defendant under § 1962(c), and could not be held vicariously liable

for a § 1962(c) violation. App. A, 42a.

7 The court did not suggest that this possible consequence of the

mailings could be squared with its finding that plaintiffs were con-

temporaneously aware of the alleged fraud, App. A, 14a-16a, or with

plaintiffs’ concession that the alleged fraud played no part in their

decision to accept the severance option. R.702, 773.

a violation of 18 U.S.C. § 664, App. A, 56a; see also App.

H, 104a-105a, although there was no showing that the

payment of such benefits was inconsistent with the Plan

or applicable law. See App. A, 55a.

The court also reversed the grant of summary judgment

on the ERISA claim. While acknowledging that under

existing case law no retirement plan was “established”

for ERISA purposes until April 1985, App. A, 20a n.32,

the court nevertheless determined that ERISA applied

to the plan as of February 1, 1982, solely because that

was the retroactive “effective date” specified in the April

1985 Plan document. App. A, 22a-23a. Although plain-

tiffs had alleged no breach of ERISA by Huttinger, the

court found that Huttinger owed plaintiffs certain dis-

closure and fiduciary duties under ERISA, App. A, 29a,

and that a genuine issue of material fact existed as to

whether TACA and ALPA owed (and, if so, breached)

any ERISA fiduciary duties, App. A, 25a, including

“which party had the responsibility to implement the

Plan” after February 1982. App. A, 28a. The court

also found that a material issue of fact existed as to

whether TACA and ALPA colluded with Huttinger to

wrongfully provide him with retirement benefits. App.

A, 33a.

In response to a petition for rehearing by ALPA and

Huttinger, the court converted its determinations as to

the effective date of the Plan and as to Huttinger’s duty

of disclosure, into disputed issues of fact. App. H, 104a.

The court “neither approve[d] nor disapprove[d]” peti-

tioners’ contention that reliance on state fraud law as a

source of substantive law for the mail fraud claim was

federally preempted. App. H, 105a. In all other respects

the court refused to modify its earlier decision. Id.

Pee ee el RAE aS OOO EOE Oe he

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= Ane as Pm see

REASONS FOR GRANTING THE WRIT

This case presents three issues of great importance

which merit this Court’s review.

First, there is the fundamental issue of whether em-

ployees can use state iaw, through a RICO claim, to chal-

lenge an agreement which their employer and union have

reached through collective bargaining. The Fifth Circuit

permitted plaintiffs to accomplish just that result by

simply converting their original hybrid DFR/breach of

contract claim into a mail fraud claim under civil RICO.

The lower court’s decision subverts the basic substantive

standards, remedies and procedures applicable to the duty

of fair representation which this Court has carefully

crafted in furtherance of federal labor policy. The de-

cision below fundamentally undermines established fed-

eral labor law, ignores basic principles of federal pre-

emption, and subjects union conduct governed by the

duty of fair representation or related to retirement plans

to state regulation, expansive vicarious liabiiity concepts,

and massive, non-remedial damages. The lower court

compounded its error, and further undermined federal

labor policy, by extending RICO predicate statutes to con-

duct that Congress never intended to criminalize. In so

doing, the decision below failed to follow this Court’s ad-

monition that criminal statutes must be strictly construed.

Second, the decision below converts the “continuity”

element of RICO into a meaningless formality by hold-

ing that a RICO defendant may “pose a continuing

threat” of racketeering activity merely if it has been

named as a defendant by other plaintiffs in a different

RICO lawsuit. In this regard, the lower court’s analysis

is also fiatly inconsistent with this Court’s decisions as

to the evidentiary showing required in opposing sum-

mary judgment motions. The only other basis for the

Fifth Circuit’s “continuity” holding—one defendant’s cur-

rent receipt of the alleged proceeds of a long-terminated

racketeering scheme—converts any finite scheme involv-

ing asserted economic crimes into “continuing” racketeer-

ing activity. The lower court’s treatment of RICO’s con-

tinuity element places it in direct conflict with decisions

of this Court and other circuits.

Third, until the decision below, the lower courts were

uniformly in agreement than an ERISA plan is not

“established,” and ERISA fiduciary obligations do not

begin to attach, until, inter alia, it can be determined

what benefits will be provided under the plan and the

procedures by which they can be obtained. The court

below, in direct conflict with these authorities, suggests

that where parties include a retroactive effective date

in a plan, as the tax law encourages, they may thereby

incur an ERISA fiduciary liability » rior to establishment

of a plan. If this ruling is pe: nitted to stand, it will

greatly discourage funding of retirement plans prior to

their “establishment” and inflict serious adverse conse-

quences on the very persons ERISA is designed to bene-

fit—plan participants and beneficiaries.

In light of the foregoing, review by this Court is

warranted.

I. THE APPLICATION OF RICO, STATE COMMON

LAW AND EXPANDED CRIMINAL SANCTIONS TO

UNION CONDUCT IN COLLECTIVE BARGAINING

AND RELATED TO RETIREMENT PLANS DI-

RECTLY CONFLICTS WITH FUNDAMENTAL FED-

ERAL LABOR LAW POLICY AND DECISIONS OF

THIS COURT AND OTHER CIRCUITS AND PRE-

SENTS AN ISSUE OF COMPELLING IMPORTANCE

WARRANTING THIS COURT'S REVIEW

A. Application of State Common Law Standards And

Vicarious Liability Doctrine To Union Collective

Bargaining Conduct

The overriding objective of the RLA is to resolve labor

disputes without disrupting interstate commerce. See

Detroit & TS.LR.R. ¥. United Transp. Union, 396 U.S.

— <<

A a a Al Te ee

142, 148 (1969). Because collective bargaining is the

primary vehicle for achieving this goal, the duty imposed

on carriers and labor unions by Section 2 First, 45 U.S.C.

§ 152 First, “to exert every reasonable effort to make and

maintain [collective bargaining] agreements,” is “central

to the effective working of the Railway Labor Act.”

Chicago & N.W. Ry. v. United Transp. Union, 402 U.S.

570, 578 (1971). Accord Brotherhood of R.R. Trainmen

v. Jacksonville Terminal Co., 394 U.S. 369, 377-78

(1969).

Congress has determined that labor disputes are best

resolved by requiring that management deal with a sin-

gle, exclusive representative, chosen by a majority of the

employees in a bargaining unit, on matters relating to

terms and conditions of employment. Vaca vy. Sipes, 386

U.S. 171, 182 (1967). See Emporium Capwell Co. v.

Western Addition Community Org., 420 U.S. 50, 62, 67-

68 (1975); International Ass’n of Machinists v. Street,

367 U.S. 740, 760 (1961); Steele v. Louisville & N. R.R.

323 U.S. 192, 199-200 (1944). To counterbalance this

majoritarian power, unions are bound by a correlative

duty of fair representation implied from the statutory

grant of representational authority. United Steelworkers

v. Rawson, US. —, 58 U.S.LW. 4556, 4559

(U.S. May 14, 1990); Vaca, 386 U.S. at 177; Steele, 323

U.S. at 199, 202-03.

With respect to union conduct in collective bargaining,

this Court has recognized that “|t)he complete satisfac-

tion of all who are represented is hardly to be expected,”

Ford Motor Co. v. Huffman, 345 U.S. 330, 338 (1953),

and that unions must be afforded substantial discretion—

“la) wide range of reasonableness”—in assessing and re-

solving the competing, often conflicting interests within

the workforce. Jd. at 338. Accord Steele, 323 U.S. at

203. Even under the arguably more stringent DFR

standard applicable to a union in its role as contract ad-

ministrator, the need for union discretion is recognized

and the duty is breached only when a union’s conduct is

“arbitrary, discriminatory or in bad faith.” Vaca, 386

U.S. at 190-92. Thus, the check on union discretion

which the duty imposes is “purposefully limited” to in-

sure that unions are not deprived of the flexibility which

is essential to performance of their responsibilities. Raw-

son, 58 U.S.L.W. at 4559. Accord International Bhd. of

Elec. Workers v. Foust, 442 U.S. 42, 51 (1979).

Principles governing DFR litigation have similarly

been carefully structured to further the proper role of ,

the duty within the collective bargaining system. For ex-

ample, in selecting an appropriate statute of limitations

for DFR claims, this Court, in DelCostello v. International

Bhd. of Teamsters, 462 U.S. 151, 163-72 (1983), re-

jected the typical adoption of varying state limitations

periods for a federal action. See Holmberg v. Armbrecht,

327 U.S. 392, 395 (1946). Instead, the Court adopted as

a uniform rule, the relatively brief NLRA six-month limi-

tation for unfair labor practices, because it more properly

balanced “ ‘the national interests in stable bargaining

relationships,’ with the interests of employees in remedy-

ing the effects of unjust union conduct. DelCostello, 462

U.S. at 171-72 (quoting United Parcel Serv., Inc. V.

Mitchell, 459 U.S. 56, 70 (1981) ).

Finally, in “implement|ing) a remedial scheme that

will best effectuate the... [RLA’s] overarching legisla-

tive goal” of “facilitat{ing] collective bargaining and .. .

achiev|ing] industrial peace,” Foust, 442 U.S. at 47, this

Court limited damages for a DFR breach to those needed

to make the injured employee whole and which are strictly

attributable to the union’s misconduct. Jd. at 49; Czosek

v. O'Mara, 397 U.S. 25, 29 (1970); Vaca, 386 U.S. at

197; Steele, 323 U.S. at 206-07. In Foust, this Court

determined that punitive damages may not be awarded

for DFR breaches by RLA unions. 442 U.S. at 52. Ae-

cord Lewis v. Local Union 100, Laborers’ Int'l Union,

750 F.2d 1368, 1382 (7th Cir. 1984); Quinn v. Di-

i ee

+ ee one catetve Laminate oo Bie te ee ee

Giulian, 739 F.2d 637, 647 (D.C. Cir. 1984). Because

punitive damages are not make-whole in nature, they

conflict with the essentially remedial scheme of the RLA.

Foust, 442 U.S. at 51. In addition, substantial damage

awards would undermine “the financial stability of unions

and unsettle the careful balance of individual and collec-

tive interests which this Court has previously articulated

in the unfair representation area.” Jd. at 48.

In sum, the federal duty of fair representation has

been carefully constructed to further the objectives of

federal labor policy. Because that federal policy would

be directly threatened if union representational conduct

was subject to varying state laws, such state regulation

must be preempted. Richardson v. United Steelworkers,

864 F.2d 1162, 1165-67 (5th Cir. 1989), cert. denied, 58

U.S.L.W. 3736 (U.S. May 22, 1990); Jones v. Truck

Drivers Local Union No. 299, 838 F.2d 856, 861-62 (6th

Cir. 1988), cert. denied, 110 S.Ct. 404 (1989); Johnsen

v. United Food & Commercial Workers Union, Local 28,

828 F.2d 961, 967 (3d Cir. 1987) ; Evangelista v. Inland-

boatmens’ Union of the Pac., 777 F.2d 1390, 1400-01

(9th Cir. 1985); Peterson v. Atr Line Pilots Ass'n, Int'l,

759 F.2d 1161, 1170 (4th Cir.), cert. denied, 474 U.S.

946 (1985); Maynard v. Revere Copper Prod., 773 F.2d

733, 735-36 (6th Cir. 1985); Condon v. Local 2944,

United Steelworkers, 683 F.2d 590, 594-95 (1st Cir.

1982). See Vaca, 386 U.S. at 188-93 (federal law gov-

erns duty of fair representation claim). See generally

San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236,

243 (1959) (state regulation preempted where Congress

has oceupied the field); Local 20, Teamsters v. Morton,

377 U.S. 252, 261 (1964) (same).

The Fifth Circuit’s approach to the mail fraud claim

violates principles of federal preemption and, by substi-

tuting state law as the operative standard for union rep-

resentational conduct, unravels federal labor law in an

area which-has been developed with painstaking care

and deliberation.

Because the mail fraud statute does not define the

“fraud” it proscribes, the substantive standard must be

drawn from other sources. Parr v. United States, 363

U.S. 370, 389 (1960). As the court below found, plain-

tiffs’ mail fraud claim challenges union collective bar-

gaining activities; all the alleged mailings “occurred dur-

ing the negotiation process.” App. A, 48a. By not fore-

closing, as a matter of law, the use of state common law

fraud as the substantive basis for mail fraud under such

circumstances, the lower court permits RICO plaintiffs

to accomplish several results which are flatly prohibited

by federal 'abor law.*®

First, it allows plaintiffs to circumvent the DelCostello

limitations period simply by repackaging their DFR claim

as predicate acts of mail fraud under RICO. Cf. May-

nard, 773 F.2d at 733 (allowing plaintiff to recast DFR

claim as state claim would destroy uniformity required

by DelCostello) ; Jones, 838 F.2d at 861 (same).

Second, by recycling their DFR claims into RICO

claims, plaintiffs are able to secure treble damages, see

18 U.S.C. § 1964(c), for the same injuries they claim to

have suffered due to defendants’ alleged DFR breach.

R. 14-16, 498. This result is patently at odds with Vaca,

Czosek and Foust. Cf. Texas Indus., Inc. v. Radcliff Ma-

terials, 451 U.S. 630. 639 (1981) (characterizing anti-

trust treble damages as punitive in nature).

Third, by permitting RICO plaintiffs to rely on the

state common law of fraud to challenge union represen-

tational conduct, the lower court allows potentially in-

consistent state law norms to set the standards in an area

at the heart of federal labor law. A union’s conduct of

negotiations does not “touch[] interests deeply rooted in

8 See Rawson, 58 U.S.L.W. at 4561 (Kennedy, J., dissenting)

(agreeing that Supreme Court decisions holding state law preempted

cannot be circumvented “by the more ‘relabeling’ as a tort claim

an action that in law is based upon the collective bargaining

process”’).

aN On asad ice SAN See i Na Ne 0m the Si ts Sethanenllseets } ~

abinekeeser it.

local feeling and responsibility.” Garmon, 359 U.S. at

243.° Nor are plaintiffs pursuing an independent claim

under rights granted by other federal legislation. Cf.

Atchison, T. & S.F. Ry. v. Buell, 480 U.S. 557 (1987)

(claim under Federal Employers’ Liability Act); Alew-

ander Vv. Gardner-Denver Co., 415 U.S. 36 (1974) (Title

VII claim). The substantive standards that would reg-

ulate union conduct under the lower court’s approach are

wholly a creature of state law, with RICO (and its

treble damages) merely the procedural vehicle for their

application.

Fourth, the lower court’s conclusion that a union could

be vicariously liable under RICO for a union representa-

tive’s mail fraud, App. A, 48a, conflicts directly with the

prohibition on union vicarious liability contained in Sec-

tion 6 of the Norris-LaGuardia Act, 29 U.S.C. § 106,'°

which applies “in all matters growing out of labor dis-

putes,” United Bhd. of Carpenters v. United States, 330

U.S. 395, 401 (1947), whether resting on federal law,

see id., or state law. See United Mine Workers v. Gibbs,

383 U.S. 715, 737 (1966). The reimposition, through

RICO, of vicarious liability doctrine to labor disputes,

an approach Congress consciously discarded years ago,

see Ramsey v. United Mine Workers, 401 U.S. 302, 310

(1971), is a further indication of the damage the deci-

sion below portends to settled principles of federal labor

law.

9 See generally Farmer v. United Bhd. of Carpenters, 430 U.S.

290, 296-301 (1977).

10 29 U.S.C. § 106 provides:

No officer or member of any association or organization, and

no association or organization participating or interested in a

labor dispute, shall be held responsible or liable in any court of

the United States for the unlawful acts of individual officers,

members, or agents, except upon clear proof of actual participa-

tion in, or actual authorization of, such acts, or ratification of

such acts after actual knowledge thereof.

The foregoing consequences of the decision below can

be expected to induce widespread resort to RICO via mail

fraud in an area governed by federal labor law. This

will not only unsettle the system of collective bargaining,

contra Foust and DelCostello, but require extensive, costly

litigation of matters which, if pled directly under state

law, would be precluded on preemption grounds.

B. Application of State Common Law to Matters Re-

lated to ERISA Retirement Plans

The court below held that plaintiffs stated a RICO

predicate mail fraud claim, under the state common law

of fraud, see supra, p. 7, based upon Huttinger’s alleg-

edly improper continued receipt by mail of benefits from

the TACA retirement plan. This decision directly con-

flicts with ERISA’s preemption provisions and related

decisions of this Court.

ERISA preempts any and all state law (with excep-

tions not relevant here) that may “relate to” an em-

ployee benefit plan. 29 U.S.C. §1144(a). Accordingly,

ERISA displaces state law “if it has a connection with

or reference to such a plan.” Shaw v. Delta Airlines,

Inc., 463 U.S. 85, 97 (1983). Accord Pilot Life Ins. Co.

v. Dedeaux, 481 U.S. 41, 47 (1987). See also Metropoli-

tan Life Ins. Co. v. Taylor, 481 U.S. 58, 62 (1987). As

this Court noted in Dedeaux, “|t]he deliberate care with

which ERISA’s civil enforcement remedies were drafted

and the balancing of policies embodied in its choice of

remedies argue strongly for the conclusion that ERISA’s

civil enforcement remedies were intended to be exclu-

sive.” 481 U.S. at 54. Accord Massachusetts Mut. Life

Ins. Co. V. Russell, 473 U.S. 184, 146 (1985). Claims of

common law fraud in connection with an employee bene-

fit plan “relate to” the plan within the meaning of 29

U.S.C. § 1144(a) and are preempted. E.g., Dedeaux, 481

U.S. at 47.7 ERISA’s comprehensive enforcement scheme

is no less threatened if the state fraud claim is raised

through mail fraud; indeed, the danger is arguably

greater in this context given the criminal underpinnings

of RICO and because Congress purposefully limited the

criminalization of ERISA violations to matters not pre-

sented by Huttinger’s receipt of benefits. See infra, p.

20. Review of the decision below is essential to fore-

stall this potentially severe threat to ERISA’s remedial

scheme.

C. Extension of Criminal Statutes to Labor Conduct

Not Criminalized by Congress

By subjecting to criminal sanction labor conduct that

Congress has chosen not to criminalize, the Fifth Cir-

cuit’s decision substantially alters the established inter-

play between federal labor law and criminal law.

Because the RICO predicate statutes are all criminal,

a court assessing their reach “must pay close heed to

language, legislative history, and purpose in order

strictly to determine the scope of the conduct the enact-

ment forbids. Due respect for the prerogatives of Con-

gress in defining federal crimes prompts restraint” and

“typically” dictates a “ ‘narrow interpretation.’” Dow-

ling v. United States, 473 U.S. 207, 213 (1985) (citations

omitted).* This approach is particularly necessary in

the labor sphere, because Congress crafted the labor laws

1 Accord Lea vy. Republic Airlines, Inc., 184 L.R.R.M. (BNA)

2165, 2170-71 (9th Cir. 1990); Lee v. E.J. DuPont de Nemours &

Co., 894 F.2d 755, 758 (5th Cir. 1990); Farlow v. Union Cent. Life

Ins. Co., 874 F.2d 791, 793-94 (11th Cir. 1989); Phillips v. Amoco

Oil Co., 799 F.2d 1464, 1470 (11th Cir. 1986); Foltz v. U.S. News &

World Report, Inc., 627 F. Supp. 1143, 1175-76 (D.D.C. 1986);

Ogden v. Michigan Bell Tel. Co., 571 F.Supp. 520, 522-24 (E.D.

Mich. 1983).

12 Accord Williams v. United States, 458 U.S. 279, 290 (1982);

United States v. Bass, 404 U.S. 336, 347 (1971); United States v.

Universal C.I.T. Credit Corp., 344 U.S. 218, 221-22 (1952).

to be essentially remedial, Foust, 442 U.S. at 52, and

narrowly delineated those actions which merit criminal

sanction. E.g., 29 U.S.C. § 186." These considerations

prompted the Second Circuit, in United States v. DeLau-

rentis, 491 F.2d 208, 212-14 (2d Cir. 1974), to decline

to apply 18 U.S.C. § 241,'* a general federal criminal

statute, to union officials’ coercion of employees to strike,

because neither the wording nor legislative history of the

NLRA reflected an intent to criminalize conduct which

constituted unfair labor practices under federal labor

law.

Similarly, the determination by Congress to include

only a limited number of crimes in the labor area as

RICO predicate acts, see 18 U.S.C. § 1961(1), counsels

that RICO scrutiny of labor activities be confined to con-

duct subject to those statutes. See Butchers Union Local

498 v. SDC Investment, Inc., 631 F.Supp. 1001, 1009

(E.D. Cal. 1986). The court below ignored this Con-

gressional determination and this Court’s guidelines for

criminal statutory construction by its treatment of the

13 The single criminal provision of the RLA, 45 U.S.C. § 152 Tenth,

applies only to carriers, not univns, and there has been only one

reported prosecution. United States v. Winston, 558 F.2d 105 (2d

Cir. 1977).

1418 U.S.C. § 241 provides in pertinent part that:

If two or more persons conspire to injure, oppress, threaten, or

intimidate any citizen in the free exercise or enjoyment of any

right or privilege secured to him by the Constitution or laws of

the United States, or because of his having so exercised the

same;

[S}hall be fined not more than $10,000 or imprisoned not more

than ten years, or both...

1518 U.S.C. § 664 (theft or embezzlement from an employee bene-

fit plan); 18 U.S.C. § 1951 (extortion); 18 U.S.C. § 1954 (unlawful

welfare fund payments); 29 U.S.C. § 186 (employer payments to a

labor organization or its agents): 99 U.S.C. § 501(c) (embezzlement

of union funds).

two predicate acts it found to have been adequately

stated: 18 U.S.C. § 664 and mail fraud.

Section 664 is directed solely at safeguarding assets

of “any employee welfare benefit plan or employee pen-

sion benefit plan” from embezzlement, theft or conver-

sion. 18 U.S.C. § 664; H. R. Rep. No. 998, 87th Cong.,

Ist Sess. 16 (1961), reprinted in 1962 U.S. Code Cong.

& Ad. News 1532, 1547; United States v. Andreen, 628

F.2d 1236, 1240-41 (9th Cir. 1980) (the “essence of the

crime is theft” from employee welfare and _ pension

funds); Ris v. Bedell, 699 F.Supp. 429, 4386 (S.D.N.Y.

1988) (same). Notwithstanding the limited scope of this

statute, the lower court concluded that 18 U.S.C. § 664

could be violated if plaintiffs established a breach of “any

fiduciary duties” under ERISA or under Section 501 (a)

of the Landrum-Griffin Act, 29 U.S.C. §501(a). App.

A, 56a & n.102 (emphasis added) ; App. H, 104a.

Regardless of the scope of § 501(a)’s fiduciary duties,

the only conduct which Congress criminalized in § 501,

and which it included as a RICO predicate act, 18 U.S.C.

§ 1961(1), is embezzlement from wnion funds under 29

U.S.C. § 501(c). See United States v. Stockton, 788 F.2d

210, 217 (4th Cir.), cert. denied, 479 U.S. 840 (1986) ;

United States v. Marolda, 615 F.2d 867, 868 (9th Cir.

1980) ; Colella v. United States, 360 F.2d 792, 799 (1st

Cir.), cert. denied, 385 U.S. 829 (1966). Nothing in the

record establishes any embezzlement of ALPA funds. To

hold, as did the court below, that the fiduciary duties im-

posed by § 501(a) may provide a basis for criminal sanc-

tion under 18 U.S.C. § 664 is, in essence, to create a new

federal crime, despite the limited scope of § 501(c), and

to add § 501(a) to the list of RICO predicate acts. This

approach conflicts with the established rule that “legisla-

tures and not courts should define criminal activity.”

Bass, 404 U.S. at 348."*

16 The Fifth Circuit’s untoward reading of § 501(a) is particularly

inapt in this case given that the complaint does not assert a

The same consequences flow from the Fifth Circuit’s

apparent determination that any breach of ERISA fidu-

ciary duties may establish a violation of 18 U.S.C. § 664,

even if unconnected to a misappropriation of plan funds.

For example, this would make the failure by an ERISA

plan trustee to follow the prudent man rule under 29

U.S.C. § 1104 in investing plan assets a felony. Nothing

in the wording or legislative history of §%64 or ERISA

reflects such an intent. To the contrary, ERISA attaches

criminal liability only to willful violations of its report-

ing and disclosure requirements, 29 U.S.C. § 1131;

Dedeaux, 481 U.S. at 58, thereby demonstrating that

ERISA’s fiduciary obligations are to be enforced only

through ‘ERISA’s comprehensive civil remedial scheme.

29 U.S.C. § 11382. See Russell, 473 U.S. at 147. Cf. North-

west Airlines, Inc. v. Transport Workers Union, 451 U.S.

77, 97 (1981); Switchmens Union v. National Mediation

Bd., 320 U.S. 297, 301 (1948) (“the specification of one

remedy normally excludes another’).

The Fifth Circuit compounded its error through its ex-

pansive application of the general mail fraud statute

which effectively subjects a union to criminal sanctions

for a DFR breach. This approach conflicts with that of

other courts which have rejected application of the mail

fraud RICO predicate statute to conduct regulated by

federal labor law. SDC Investment, 631 F.Supp. at 1011

(E.D. Cal. 1986) (employer attempts to frustrate or-

ganizational rights of employees); Brown v. Keystone

Consol. Indus., 680 F.Supp. 1212, 1225-26 (N.D. II.

1988) (employer misrepresentations in collective bar-

gaining. See MHC, Inc. v. United Mine Workers, 685 F.

§ 501(a) claim (even the RICO Case Statement only references

§ 501(c), R.767). Furthermore, the lower court’s approach over-

rides the remedial scheme of § 501: plaintiffs did not comply with

the procedural requirements for filing a § 501(a) suit, see 29 U.S.C.

§ 501(b); and the relief sought was against the union, rather than,

as §501(a) requires, for its benefit. See Phillips v. Osborne, 403

F.2d 826, 832 (9th Cir. 1968).

ee te

wee ste o.oo mee

Supp. 1370, 1378 (E.D. Ky. 1988) (noting that expan-

sive criminalization of conduct regulated by federal labor

law could have a chilling effect on legally permissible

concerted activities).

The Fifth Circuit’s decision to extend these criminal

statutes in this manner, and, by so doing, to expand the

reach of RICO, whose constitutional footing has already

been questioned, see H.J. Inc. v. Northwestern Bell Tel.

Co., 109 S.Ct. 2893, 2909 (1989) (Scalia, J., concurr-

ing), provides an additional compelling basis for this

Court’s review.

II. THE DECISION OF THE COURT BELOW WITH

RESPECT TO THE RICO “CONTINUITY” RE-

QUIREMENT IS IN CONFLICT WITH RICO DECTI-

SIONS OF THIS COURT AND OF OTHER CIRCUITS

AND WITH THIS COURT’S DECISIONS REGARD-

ING SUMMARY JUDGMENT EVIDENTIARY RE-

QUIREMENTS

As an element of their RICO claim, plaintiffs must es-

tablish that defendants engaged in a pattern of rack-

eteering activity. 18 U.S.C. § 1962; H.J. Inc., 109 S.Ct.

at 2897. Pattern requires “continuity plus relationship.”

Sedima, S.P.R.L. v. Imrex, Co., 473 U.S. 479, 496 n.14

(1985) (emphasis in original; citations omitted). The

Fifth Circuit relied on but two allegations to hold that

the requisite continuity may exist: (1) that ALPA was

named as a defendant in a second RICO lawsuit by

pilots employed by a different airline, and (2) that Hut-

tinger continued to receive retirement benefits. The

court’s decision fundamentally conflicts with two impor-

tant lines of Supreme Court authority.

First, the decision below flouts settled evidentiary re-

quirements for opposing summary judgment motions. Un-

der Rule 56(e), Fed. R. Civ. P., a party opposing a sum-

mary judgment motion “may not rest upon the mere

allegations of his pleadings;

”

rather he must “set forth

specific facts showing that there is a genuine issue for

trial” by affidavits, discovery responses, or other facts

which “would be admissible in evidence.” Accord Ander-

son V. Liberty Lobby, Inc., 477 U.S. 242, 248-50, 256

(1986); Celotex Corp. v. Catrett, 477 U.S. 317, 323-24

(1986) ; First Nat'l Bank of Am. v. Cities Serv. Co., 391

U.S. 253, 288-90 (1968). Despite the fact that plaintiffs

may not rely on the allegations of their own complaint

to defeat summary judgment, the decision below permits

plaintiffs to create a disputed fact issue on the RICO

continuity element merely by relying on the unsubstan-

tiated allegations of a different RICO complaint filed by

different plaintiffs against the same defendant. This in-

congruous and unprecedented approach is fundamentally

at odds with the established evidentiary requirements for

opposing summary judgment motions, and is particularly

egregious here, where the second lawsuit, Adair v. Air

Line Pilots Ass’n, Int’l, 86-C-1939 (D. Colo. Jan. 11,

1988), has been dismissed."

Second, the decision below eviscerates the established

criteria for establishing RICO continuity. Under H.J.

Inc., 109 S.Ct. at 2902, continuity requires either: (1)

repeated racketeering activity “extending over a substan-

tial period of time,” or (2) “the threat of continued

racketeering activity.” The Fifth Circuit apparently rec-

ognized that the first alternative could not be satisfied,

as the alleged “conspiracy,” directed at the singular goal

17The only “evidence” in Landry of the Adair allegations con-

sisted of attachments to a brief of the Landry plaintiffs of the Adair

complaint and a brief filed by the Adair plaintiffs in opposing (un-

successfully) ALPA’s motion to dismiss and/or for summary judg-

ment. R. 1203-14. In claiming that this “evidence” was “unrefuted

by any summary judgment evidence,” App. A, 43a, the court not only

placed the burden of production on the wrong party, but was plainly

in error. A copy of the decision dismissing Adair was annexed to the

ALPA/Huttinger brief filed with the Fifth Circuit in Landry,

together with a copy of an earlier letter provided to the trial court

and other counsel of record in Landry along with the Adair decision

immediately following its entry.

of relocating the pilot base, “briefly flourished and

faded,” App. A, 59a-60a, having been “achieved in a

matter of months.” App. A, 60a."* However, the court

-found that because ALPA was named as a RICO de-

fendant by two sets of unrelated plaintiffs, it may “pose ]

a thredt of continuing harm.” To find this sufficient to

establish continuity is to reduce RICO “continuity” to a

meaningless, formalistic requirement.

Similar consequences flow from the lower court’s de-

termination that Huttinger’s receipt of retirement bene-

fits, long after the alleged RICO scheme terminated,

somehow can indicate a threat of continued racketeering

activity. Were the Fifth Circuit’s approach adopted, every

“finite scheme—or at least those involving economic

crimes’”—would be classified as continuous racketeering

activity. Bingham v. Zolt, 683 F.Supp. 965, 970

(S.D.N.Y. 1988).

Further, this Court’s decisions require a plaintiff to

demonstrate that a defendant, through a pattern of rack-

eteering, controlled, conducted or participated in the af-

fairs of a RICO enterprise. H.J. Inc., 109 S.Ct. at 2902;

Sedima, 473 U.S. at 496. See United States v. Turkette,

452 U.S. 576, 580, 584, 591 (1981). See also Moss v.

Morgan Stanley, Inc., 719 F.2d 5, 17 (2d Cir. 1983),

cert. denied, 465 U.S. 1025 (1984). The decision below

ignores this requirement, as nothing in the record ties

Huttinger’s current benefits to the purported enterprise

18 Other courts have found an absence of RICO continuity where

the alleged racketeering scheme was of similar duration. Sutherland

v. O'Malley, 882 F.2d 1196, 1204-05 (7th Cir. 1989) (no continuity

where the goal was accomplished in a five-m nth period); Eastern

Pub. and Advertising, Inc. v. Chesapeake Pub. and Advertising, Inc.,

895 F.2d 971, 972-73 (4th Cir. 1990) (no continuity where only

single scheme of three months’ duration) ; Phelps v. Wichita Eagle-

Beacon, 886 F.2d 1262, 1273-74 (10th Cir. 1989) (no continuity

where RICO scheme had one short-lived, discrete goal); Marks v.

Pannell Kerr Forster, 811 F.2d 1108, 1111 (7th Cir. 1987) (no

continuity where predicate acts spanned several months).

(ALPA). Cf. App. A, 60a (“[i)n reality, the association

of ALPA and Huttinger had no alleged purpose other

than to commit the predicate acts leading up to the re-

location”); Occupational-Urgent Care Health Sys., Inc.

v. Sutro & Co., 711 F.Supp. 1016, 1025-27 (E.D. Cal.

1989)."° The absence of such a nexus further eliminates

any basis for holding ALPA vicariously liable for Hut-

tinger’s “continuing” racketeering acts. See also supra,

p. 15.

In sum, the Fifth Circuit’s treatment of the RICO

continuity requirement departs so dramatically from this

Court's decisions that it compels review of this case.

Ill. THE DECISION BELOW, BY IMPOSING ERISA

FIDUCIARY OBLIGATIONS PRIOR TO THE TIME

A RETIREMENT PLAN IS ESTABLISHED, CRE-

ATES A SPLIT IN THE CIRCUITS AND SIGNIFI-

CANT ADVERSE CONSEQUENCES FOR RETIRE-

MENT PLANS, EMPLOYEES AND BENEFICI-

ARIES, WHICH MERIT THIS COURT'S REVIEW

The fiduciary obligations created by Title I of ERISA,

29 U.S.C. $1104, apply (with exceptions not relevant

here) only to “employee benefit plan{s),” including pen-

sion plans, 29 U.S.C. § 1002(3), “established or main-

tained” by an employer, a union, or both. 29 U.S.C.

$ 1003(a) (emphasis added). In Donovan v. Dillingham,

688 F.2d 1367, 1373 (llth Cir. 1982) (en banc), the

Eleventh Circuit held that a plan is “established,” and

ERISA’s fiduciary obligations apply, only “if from the

surrounding circumstances a reasonable person can as-

Even the court below found plaintiffs’ bald assertion that

Huttinger used his “power” within ALPA to improperly continue

in his position as negotiator for the TACA pilots to be without evi-

dentiary support. App. A, 46a-47a. Moreover, Huttinger’s term as

an Executive Vice President of ALPA ended before the alleged

racketeering activity began, R. 939, and, at the time of the alleged

racketeering scheme, he “controlled” the votes of less than 1% of

the ALPA membership. R. 939.

certain the intended benefits, a class of beneficiaries, the

source of financing and procedures for receiving bene-

fits.” The Dillingham approach is entirely consistent

with this Court's decision in Fort Halifax Packing Co.

v. Coyne, 482 U.S. 1 (1987). In holding, in Fort Hali-

fax, that ERISA applies only to “plans,” the Court ex-

plained that the focus of ERISA’s regulatory scheme

“is on the administrative integrity of benefit plans—

which presumes that some type of administrative activity

is taking place,” id. at 15 (emphasis added), because

“only ‘plans’ involve administrative activity potentially

subject to... abuse.” /d. at 16.

The decision below directly conflicts with Dillingham

and its progeny. Despite acknowledging that it was not

until 1985 that “all the [Dillingham] requirements for a

plan were met,” App. A, 20a n.32, the court initially

held that ERISA’s fiduciary duties were triggered “as a

matter of law” on February 1, 1982, solely because that

was the “effective date” provided in the April 1985

plan.** App. 22a-23a. While it partially retreated from

* The Dillingham formulation has been uniformly followed. See

Harris v. Arkansas Book Co., 794 F.2d 358, 360 (8th Cir. 1986):

Ed Miniat, Inc. v. Globe Life Ins. Group, Inc., 805 F.2d 732, 739

(7th Cir. 1986), cert. denied, 482 U.S. 915 (1987); Scott v. Gulf Oi

Corp., 754 F.2d 1499, 1504 (9th Cir. 1985); Gerred v. General Am.

Life Ins. Co., 723 F.Supp. 1325, 1327-28 (W.D.Ark. 1989); Pitre v.

Louisiana Health Serv. and Indem. Co., 122 F.R.D. 497, 499 (W.D.

La. 1998); Rollo v. Mazicare of Louisiana, Inc., 695 F.Supp. 245,

247 (E.D. La. 1988); Dodd v. John Hancock Mutual Life Ins. Co.,

688 F.Supp. 564, 566-67 (E.D. Cal. 1988); Rasmussen v. Metropoli-

tan Life Ins. Co., 675 F. Supp. 1497, 1500 (W.D. La. 1987): Bausch

& Lomb, Inc. v. Smith, 630 F.Supp. 262, 263 (W.D.N.Y. 1986).

™! The court below not only ignored the Dillingham requirements,

but also the terms of the February 1982 agreement by which TACA

and ALPA agreed to establish a retirement plan in the future. That

agreement provided, inter alia, that “[t)he specifics of the retirement

plan for pilots shall be determined” and that TACA'’s contributions

were to be held in trust “until such time as the retirement plan for

pilots has been established and implemented.” (Emphasis added).

See App. A at 20a. The Fifth Circuit chose to “ignore the implica-

that holding on rehearing by directing the trial court to

treat the date the plan went “into effect” as a disputed

factual issue, App. H, 104a, the decision below still leaves

open the possibility that there is an ERISA fiduciary

duty to “implement” a plan and that ERISA fiduciary

obligations may commence prior to plan establishment.

The prospect of such pre-establishment ERISA liability

not only presents a direct conflict with Dillingham and

its progeny, but also with the consistent position of this

Court and lower courts that the conduct of unions and

employers with respect to the negotiation, establishment

or design of collectively bargained employee benefit plans

is governed by the national labor laws, not ERISA. See

UMWA Health & Retirement Funds v. Robinson, 455

U.S. 562, 573-76 (1982); NLRB v. Amazx Coal Co., 453

U.S. 322, 336-38 (1981).”

An imposition of ERISA fiduciary duties prior to plan

establishment also poses significant, adverse consequences

for retirement plans and, in turn, for the individuals who

are or would be covered by such plans. There is often a

time lapse between the initial agreement of employers

and unions to create a plan and the actual plan estab-

lishment. Unions attempt to obtain commencement of

employer contributions during this pre-establishment pe-

riod because this improves the future plan’s financial

base. To encourage such “early” employer funding

(which employers are not legally required to provide),

Section 401(i) of the Internal Revenue Code (the

“Code”), 26 U.S.C. § 401(i), grants retroactive qualifica-

tions of these terms . . . because the April, 1985 retirement plan is

explicitly retroactive to February, 1982.” App. A at 22a.

™ Accord Lea, 134 L.R.R.M. at 2169-70; United ind. Flight

Officers, Inc. v. United Air Lines, Inc., 756 F.2d 1274, 1280 (7th Cir.

1985) ; Sutton v. Weirton Steel Div. of Nat'l Steel Corp., 567 F.Supp.

1184, 1201 (N.D. W.Va.), aff'd, 724 F.2d 406 (4th Cir. 1983), cert.

denied, 467 U.S. 1205 (1984). See also Adams v. General Tire &

Rubber Co., 794 F.2d 164, 166 (4th Cir. 1986).

tion, and thus favorable tax treatment, to a trust created

through collective bargaining to serve as a repository for

such pre-plan contributions until the qualified plan and

trust are established. To take advantage of Section

401(i) and to secure tax-deductibility for the pre-plan

contributions under Section 404 of the Code, 26 U.S.C.

§ 404, the plan, when established, must have (as here) a

retroactive “effective” date, relating back to the year in

which the contributions were first made.”

The decision below substantially undermines the bene-

ficial objectives of § 401(i) of the Code. If, by agreeing

to make plans retroactively effective, employers and

unions subject themselves, in advance of plan establish-

ment, to ERISA fiduciary obligations and attendant po-

tential liability of unknown dimensions, they will un-

doubtedly be far less likely to effectuate their plans retro-

actively. If that occurs, employers will not fund plans

prior to their establishment, which will deprive plan par-

ticipants of the additional financial security provided by

pre-establishment funds.** Moreover, in plans where the

level of employer contributions are fixed by contract, the

loss of pre-plan contributions is likely to result in lower

benefit levels. Finally, unless plans are retroactively ef-

fective, employees who die, become disabled or retire dur-

ing the retroactive period will, in all likelihood, not be

covered. These significant adverse consequences of the

decision below will be felt not by employers or unions,

but by the very persons whom ERISA was designed to

2° Under Section 404(a)(1)(A) of the Code, an employer's pension

contributions are deductible for any given year only if, at the end of

such year, there is a qualified pension plan and trust in effect.

*%* While the Pension Benefit Guaranty Corporation (“PBGC"’)

guarantees payment of certain minimum pension benefits, see gen-

erally 29 U.S.C. §§ 1301-1323, specific statutory limitations on such

guarantees, ¢.g., 29 U.S.C. §§ 1322, 1322A, 1322B, make increased

employer funding critical to participants’ actual receipt of promised

benefits as well as to the PBGC’s continued solvency.

benefit—employees and their beneficiaries. Shaw, 463

U.S. at 90.

Review by this Court is needed to prevent the harm-

ful, practical effects to ERISA plans of the decision be-

low and to reestablish the uniformity in judicial treat-

ment of these important ERISA issues.

CONCLUSION

For the foregoing reasons, this petition for a writ

of certiorari should be granted.

Respectfully submitted,

STEPHEN B. MOLDOF

Counsel of Record

ANN E. O’SHEA

MICHAEl. L. WINSTON

THOMAS N. CIANTRA

COHEN, WEISS AND SIMON

830 West 42nd Street

New York, New York 10036

(212) 563-4100

Attorneys for Petitioners

Air Line Pilots Association,

International, AFL-CIO and

Charles J. Huttinger

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APPENDICES

APPENDIX A

UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

No. 88-3363

FRANK LANDRY, et al.,

Plaintiffs-Appellants,

AIR LINE PILOTS ASSOCIATION INTERNATIONAL AFL-CIO,

TACA AIRLINES, §.A. and CHARLES J. HUTTINGER,

Defendants-A ppellees.

Appeal from the United States District Court

for the Eastern District of Louisiana

Jan. 31, 1990

Before BROWN, JOHNSON and DAVIS, Circuit

Judges.

JOHN R. BROWN, Circuit Judge:

Several airline pilots brought this action against their

former employer, union, union representative, and the

administrator of their pension plan. The pilots alieged

violations of labor law, ERISA, and RICO. Granting

motions for summary judgment, the Court held: (i) the

statute of limitations barred the labor law claims; (ii)

ERISA imposed no fiduciary duties on the defendants;

and (iii) the pilots failed to meet the necessary elements

of a RICO claim. The Court also granted a protective

order preventing further discovery of the defendants.

On appeal, we affirm the lower court’s holding with re-

spect to the statute of limitations and the protective or-

der. However, we find that summary judgment was im-

proper on the ERISA and RICO claims. Accordingly,

we reverse and remand to the trial court the ERISA and

RICO claims.

I. The Facts

A. History of Relations between TACA and ALPA

1. If at first you don’t succeed...

TACA International Airlines, S.A. (TACA), incorpo-

rated under the laws of El Salvador, operates in Cen-

tral America and the United States. From 1949 until

1985, all TACA pilots were based in New Orleans, Lou-

isiana. In 1968, the Airline Pilots Association, Interna-

tional, AFL-CIO (ALPA), was certified as the collec-

tive bargaining representative for all pilots employed by

TACA, and thereafter negotiated numerous collective bar-

gaining agreements with TACA.

The relevant history of this case begins over two

decades ago. In 1969, shortly after TACA entered into

its first agreement with ALPA, the Republic of El Sal-

vador requested that TACA relocate its pilot base from

New Orleans to El Salvador. When TACA attempted to

comply with the request of the Salvadoran government,

ALPA sought and obtained an injunction, maintaining

that if the relocation occurred, ALPA could no longer,

under Salvadoran law, represent the pilots. A bar of

representation would have abrogated the recently-entered

collective bargaining agreement between ALPA and

TACA. This Court affirmed the district court injunction.

Ruby v. TACA International Airlines, S.A., 439 F.2d

1359 (5th Cir.1971).

2. ... try, try, again...

In October of 1979, TACA and ALPA entered into

a collective bargaining agrement, effective January 1,

1980 and amendable on December 31, 1983 (the 1980

collective bargaining agreement). In October, 1983,

ALPA and TACA commenced negotiations to amend and

continue the 1980 collective bargaining agreement.

However, on December 20, 1983, the Republic of El

Salvador adopted a new Constitution; Article 110, § 4 of

that constitution provided that Salvadoran public serv-

ice companies must have their work center and base of

operations in El] Salvador. Airline Pilots Ass’n, Int’l v.

TACA, Int'l Airlines, S.A., 748 F.2d 965, 968 (5th Cir.

1984), cert. denied, 471 U.S. 1100, 105 S.Ct. 2324, 85

L.Ed.2d 842 (1985). As a result, while in the midst of

negotiations, TACA announced its intention to immedi-

ately relocate its pilot base from New Orleans to El Sal-

vador, to unilaterally terminate the existing agreement

and impose new terms and conditions of employment on

its pilot employees, and to withdraw its recognition of

ALPA. R. 503. Pilots were given until December 31,

1983 to accept the new terms or lose their employment

with TACA. Meanwhile, because of the potential that the

pilots would not move, TACA began advertising for new

pilots.

iJ] PA filed a lawsuit in the United States District

Court for the Eastern District of Louisiana, seeking in-

junctive relief against TACA. Judge Feldman issued a

permanent injunction prohibiting TACA from relocating

the pilot base, unilaterally changing the terms of em-

ployment, recruiting replacement pilots, and interfering

with the pilots’ choice of ALPA as their bargaining

agent.

This court affirmed the injunction, but stated

we neither hold nor suggest that TACA may not re-

locate its pilot base. We hold only that TACA must

relocate its pilot base and effect the other intended

steps in accordance with the substantive laws and

procedures set forth in the Railway Labor Act and

other relevant domestic laws.

Id., at 972.

8. ... until you do

Between 1984 and 1985, TACA and ALPA continued

negotiations under the auspices of the National Media-

tion Board (NMB). On July 24, 1985, TACA and ALPA

reached an agreement entitled “Pilots’ Agreement,” which

superseded the 1980 collective bargaining agreement un-

der which the parties had been operating. The “Pilots’

Agreement” provided that ALPA would not oppose

TACA’s relocation of its pilot base ot El Salvador after

August 31, 1985. All pilots on the seniority list as of

June 30, 1985 could elect either: (i) to receive severance

pay ($1,200.00 to each pilot for each full year of service

and pro rata amounts for partial years, with length of

service calculated through August 31, 1985), and other

benefits (passes and insurance), or (ii) to continue their

employment as TACA pilots, based in El Salvador. R.

504.

On July 24, 1985, Mr. Charles J. Huttinger, a TACA

pilot who represented ALPA in the negotiations with

TACA, sent a letter to all TACA pilots stating that “The

Association has reached a tentative agreement (subject

to ratification) with TACA.... The Company has agreed

to a total package which we believe justifies your sup-

port.”

Some of the pilots allegedly understood the July 24,

1985 letter to mean that the agreement would not be

final until it was ratified by the individual pilots. How-

ever, on August 3, 1985, a representative of TACA sent

a memorandum to all TACA pilots, informing them that

“an agreement [has been] reached by which TACA will

move its pilots base to El Salvador effective September

ba. he ee ote eee aR bai hea Ne ae

1, 1985.” The memorandum further stated that “the de-

cision to continue working for the company or retire

must. be made by August 15, 1985, at the latest.” Each

of the named plaintiffs, except Gary Zyriek, elected to

take severance pay. Mr. Zyriek had changed jobs and

was flying for United Airlines by June 30, 1985, the

date of eligibility for severance payments.

The July 24, 1985 “Pilots’ Agreement” further pro-

vided that TACA’s obligation to contribute to the pilots’

retirement fund would cease as of August 31, 1985.

Although the parties dispute the effective date of the re-

tirement plan (see infra), it was formally implemented

on April 18, 1985. Fringe Benefit Administrators (FBA)

was named as the plan administrator and the First

National Bank of Covington was the plan trustee.

On December 17, 1985, TACA and ALPA entered into

a final “settlement agreement” which resolved all claims

arising out of the July 24, 1985, “Pilots’ Agreement.”

Among other things, the agreement provided that “ALPA

agrees and acknowledges that TACA has no further ob-

ligations to the individuals who selected the severance

option under the ‘Pilots’ Agreement’. . . . concerning in-

surance coverage or benefits of any kind, or premium

payments of any kind.”

B. Procedural History

In the original Complaint, the pilots! asserted that the

July 24, 1985 “Pilots’ Agreement” was negotiated and

executed in breach of ALPA’s duty of fair representation

(DFR) to the TACA pilots and TACA’s prior collective

1There were fifteen plaintiff pilots at the trial court: Frank

Landry, Jules Corona, Charles South, Robert A. Massa, Don John-

son, Thomas Brignac, T.Q. Howard, Robert Lukenbill, Bert Haffner,

Walter Keller, Joe Haas, Gary Zyriek, Don Jenkins, Emile Cerisier,

and M. Letona. The same pilots are appellants on appeal, except for

Thomas Brignac, Robert Lukenbill, Bert Haffner, and Gary Zyriek,

who have dropped out of the case.

bargaining agreement with ALPA, in violation of the

Railway Labor Act (RLA), 45 U.S.C. §§ 151-88, and the

National Labor Relations Act (NRLA), 29 U.S.C.

§§ 141-87. Pilots sought approximately $30 million in

damages. R. 1-18. Pilots did not file their Complaint

until July 23, 1986. R. 1.

Pilots alleged that ALPA agreed to enter into the July

24, 1985 agreement as a result of TACA’s threat to sue

ALPA because some of the pilots purportedly sabotaged

TACA property at ALPA’s direction. The pilots charac-

terized this conduct as a breach of the duty of fair rep-

resentation by ALPA. In addition, the pilots have as-

serted that Mr. Huttinger was unqualified to represent

ALPA in the negotiation of the “Pilots’ Agreement.”

Huttinger had been placed on “sick” status by TACA,

and according to the pilots, under the Constitution and

By-Laws of ALPA, a pilot classified as “sick” was not

permitted to hold an office within the union.

Moreover, the pilots have filed the affidavit of Emile

Cerisier, one of the plaintiffs. Mr. Cerisier states that

Mr. G.M. Padgett was a TACA pilot who was a member

of the ALPA negotiation team that arranged the reloca-

tion of the pilot base to El Salvador. The pilots claim

that Mr. Padgett should not have been allowed on the

team because he had been suspended by TACA for sabo-

taging TACA equipment.

The Original Complaint also alleged that ALPA,

TACA, and FBA violated the Employee Retirement In-

come Security Act (ERISA), 29 U.S.C. §§ 1001-1461.

The pilots claim that ALPA, TACA, and FBA breached

fiduciary duties imposed by ERISA in the administration

and implementation of the Plan. More specifically, the

pilots allege that the defendants: (i) delayed Plan imple-

mentation for three years; (ii) refused to disclose Plan

details despite repeated requests; (iii) failed to disclose

various information about the fund’s location, amount,

ete.; and (iv) colluded among each other to allow Hut-

tinger to illegitimately receive retirement benefits.

FBA filed an answer on October 22, 1986. R. 261.

ALPA and TACA filed motions to dismiss, or alterna-

tively, for summary judgment, contending that the DFR/

breach of contract claim was barred by the applicable

six-month statute of limitations and that the pilots had

failed to state a claim for relief under ERISA. R. 33-51,

240-60. On January 13, 1987, the pilots noticed the depo-

sitions of Charles Huttinger and First National Bank,

eventually postponed at the request of the defendants.

R. 383-86.

On February 10, 1987, while those motions were pend-

ing, the pilots asked the District Court to stay all pro-

ceedings and to transfer the case for consolidation with

an action filed by ALPA in 1983, Air Line Pilots Ass’n,

Int'l v. TACA Int'l Airlines, S.A., Civ. No. 83-6238

(E.D.La.), aff'd, 748 F.2d 965 (5th Cir.1984), cert. de-

nied, 471 U.S. 1100, 105 S.Ct. 2324, 85 L.Ed.2d 842

(1985), for the expressed purpose of seeking an adjudi-

cation that TACA was in contempt of an injunction

issued to ALPA in the 1983 case. R. 408-13. Judge Feld-

man, who had presided over the earlier action. denied

pilots’ motion, explaining that “[t]his case had been

closed for several years, and this Court no longer has

any jurisdiction in this matter.” Supplemental Record on

Appeal, Minute Entry, (Feldman, J.), March 13, 1987.

By subsequent Order, the Court below denied pilots’ mo-

tion to transfer, determining, in consultation with Judge

Feldman, “that the issues presented in this matter [the

case sub judice] are not sufficiently similar to warrant

transfer.” R. 427.

On March 11, 1987, the pilots filed an amended and

supplemental Complaint, alleging violations of the Rack-

eteer Influenced and Corrupt Organizations Act (RICO)

18 U.S.C. §§ 1961-68, and requesting nearly $100 million

in damages. R. 493-99. Huttinger was added as a de-

fendant in the Amended Complaint, which incorporated

all of the allegations in the original Complaint.

By Opinion and Order dated April 24, 1987, the Dis-

trict Court granted the ALPA and TACA motions di-

rected at the Original Complaint, holding, inter alia, that

the pilots had failed to demonstrate that “TACA or

ALPA should be held liable as a ‘fiduciary’ within the

meaning of ERISA and, to the extent that the pilots

intend to assert a ‘hybrid’ claim under the RLA,? it is

clearly barred by the six-month [statute] of limitations.”

R. 511.

In May, 1987, TACA, ALPA, and Huttinger responded

to the RICO claim in the Amended Complaint by filing

motions to dismiss or alternatively, for summary judg-

ment. R. 516-83; 584-608. The Court denied the motions

without prejudice and ordered the pilots, in accordance

with a newly adopted Standing Order, te file a RICO

Case Statement (RICO St.)* R. 759-62. Pursuant to ex-

press leave of the Court, R. 758, ALPA, Huttinger, and

TACA renewed their dispositive motions, R. 855-974,

798-854, following the filing of pilots’ RICO St. R. 764-90.

On November 18, 1987, the defendants moved for pro-

tective orders to quash depositions of TACA, Huttinger,

and FBA that the pilots had noticed for October. R.

1007. The protective order was granted on December 11,

1987. R. 1104.

On December 14, 1987, the pilots filed a motion for the

Court to reconsider the application of tolling principles to

the dismissal of their DFR claims, contending that the

Court had “overlooked the doctrine of equitable tolling.”

R. 1109. A request by the pilots to file a supplemental

brief in support of their motion to reconsider was dis-

2 See infra.

*See Appendix A; see also Elliott v. Foufas, 867 F.2d 877, 880

(5th Cir. 1989).

allowed. On February 29, 1988, the Court denied the

pilots’ mution for reconsideration and ordered the pilots

to respond to the defendants’ request for sanctions.

By Opinion and Order dated March 17, 1988, the Dis-

trict Court granted summary judgment on the RICO

claim. R 1295-1311. Judgments pursuant to F.R.Civ.P.

54(b) in favor of ALPA and TACA were entered on

April 28, 1988, R. 1315, and, as to Huttinger, on May 4,

1988. R. 1316. Eleven of the fifteen plaintiffs filed a

notice of appeal on May 27, 1988.

The following issues are presented on appeal: (i) Did

the District Court apply the appropriate statute of lim-

itations to the pilots’ labor claims, and did it give ade-

quate consideration to when the limitations period began

to run? (ii) Did the lower court properly find no ERISA

plan was established until the spring of 1985, and that

neither ALPA, Huttinger, nor TACA were fiduciaries

under ERISA? (iii) Did the court below err in ruling

against the pilots’ RICO claims? (iv) Did the trial judge

abuse his discretion in quashing discovery depositions the

pilots had noticed for hearing?

II. Statute of Limitations

In their Original Complaint, pilots alleged that ALPA

breached its duty of fair representation (DFR), implied

under the RLA. They also alleged that TACA was a

party to the DFR breach. The breach arose during the

process of negotiating a new collective bargaining agree-

ment—which ultimately resulted in the removal of the

TACA pilot base to El Salvador and the severance of

all of the plaintiffs to this action. The trial court found

that by its allegations, pilots brought a “hybrid” claim.‘

*In the original “hybrid” action, an employee brought a claim

against his employer under § 301 of the NLRA for breach of the

collective bargaining agreement and against his union for breach

of the duty of fair representation implied under the NLRA. The two

10a

Such claims are subject to a six month statute of limita-

tions.” The complaint was filed August 25, 1986, but the

cause of action accrued, at the latest, on December 17,

1985 when the settlement agreement was signed. Thus

the pilots’ labor law claims were held time barred.

Pilots challenge this ruling on several grounds. They

assert that (1) this is not a DelCostello “hybrid” action;

(2) more appropriate limitations periods may be found

by resort to Louisiana’s one year statute of limitations

for tort law and ten year statute of limitations for con-

tract law; (3) the running of the statute should have

been tolled until defendants’ fraud and collusion was dis-

covered by pilots; (4) defendants should have been re-

quired to honor the judgment that forbid their relocation

unless it was accomplished in compliance with the RLA;

(5) any decertification of ALPA as the employees’ col-

lective bargaining agent should have been carried out

by the National Mediation Board.

We find that dismissal under F.R.Civ.P. 56(c) was

warranted because it was clear from the face of the com-

plaint and the declarations submitted that no material

facts were in dispute and that defendants were entitled

to judgment as a matter of law on the undisputed facts.°

actions are inextricably intertwined, for in order to prevail on one,

the employee must prevail on both. See DelCostello v. International

Bhd. of Teamsters, 462 U.S. 151, 164-65, 103 S.Ct. 2281, 2290-91,

76 L.Ed.2d 476, 489 (1983). As we shall develop, infra, this original

meaning has been expanded to apply to the type of claim brought

here.

5 DelCostello v. International Bhd. of Teamsters, 462 U.S. 151,

103 S.Ct. 2281, 76 L.Ed.2d 476 (1983). This limitation period is

imported from § 10(b) of the NLRA and applies both to the cause

of action against the union and to the one against the employee. The

DelCostello court chose to apply this analogous federal statute

of limitations rather than borrow from state law.

6“(T]he judgment sought shall be rendered forthwith if the

pleadings, depositions, answers to interrogatories, and admissions

lla

We agree with the trial court that DelCostello states the

appropriate limitations period and that pilots’ labor law

claims were time-barred.

Pilots argue that De/Costello does not apply for two

reasons. First, this case implicates the RLA, while Del-

Costello dealt with a violation of § 301 of the NLRA.

Second, DelCostello arose in the context of a grievance

proceeding under an existing collective bargaining agree-

ment. In the case sub judice by contrast, the dispute

arose out of the process of negotiating a collective bar-

gaining agreement. There was no grievance procedure

in place, so a time bar on the federal cause of action

would preclude pilots from all avenues of relief.

The Fifth Circuit has held that when a claim alleges

unfair representation, it is subject to DelCostelio’s six

month limitations period even when it arises under the

RLA, rather than the NLRA as was the case in Del-

Costello." The claim also need not be a “classic” hybrid

claim. The six month limitation period is applicable

whenever there is a DFR claim.’ Pilots have clearly

alleged a breach of the duty of fair representation.

In addition, at least one other circuit has held ex-

plicitly that the limitations period should apply “equally

to disputes arising from the process of negotiation and

on file, together with affidavits, if any, show that there is no genuine

issue as to any material fact and that the moving party is entitled

to judgment as a matter of law.” F.R.Civ.P. 56(c).

7 Brock v. Republic Airlines, Inc., 776 F.2d 523, 525-26 (5th Cir.

1985) (The “six-month statute of limitations in §10(b) of the

[NLRA] controls hybrid actions brought under the [RLA]. Hybrid

claims under either act originate from an identical implied duty

of fair representation and involve a similar balancing of competing

interests.”); see also Coyle v. Brotherhood of Ry., Airline & S.S.

Clerks, 838 F.2d 1404, 1405 (5th Cir.1988).

8 Richardson v. United Steelworkers of America, 864 F.2d 1162,

1167 (5th Cir.1989); see also Degan v. Ford Motor Co., 869 F.2d

889, 892-93 (5th Cir.1989).

12a

to those arising from actions under the agreement re-

sulting from the negotiations.” * We agree that the ra-

tionale of DelCostello applies to the facts before us now.

Thus pilots’ labor law claims are subject to a six month

statute of limitations.

In support of their second argument, pilots cite United

Parcel Service, Inc. v. Mitchell,” for the proposition that

state law provides the appropriate limitations period.

Mitchell held that a state statute of limitations for vaca-

tion of an arbitration award rather than for breach of

contract governed a similar suit. Two questions were left ;

unanswered in Mitchell, however: (i) what statute of

limitations should govern the action against the union

(only the action against the employer was subject to the

arbitration statute) and (ii) whether the statute of

limitations should be borrowed from federal law, namely

NLRA §10(b), 29 U.S.C. §160(b) rather than from

state law. DelCostello resolved these unanswered ques-

tions holding that it was indeed appropriate to borrow

from federal law and apply the six month statute of

limitations from § 10(b). That limitations period applies

to the claims against the employer and those against the

union,"

In the pilots’ third challenge to the trial court’s ruling,

they assert that the trial court should have applied the

doctrine of equitable tolling to find that pilots’ claims

were not barred by the statute of limitations. Pilots

argue that they didn’t know of the fraud and collusion

perpetrated upon them until less than six months before

they filed suit. They do not, however, detail the fraud

® United Independent Flight Officers v. United Air Lines, 756 F.2d

1262, 1271 (7th Cir.1985).

10 451 U.S. 56, 101 S.Ct. 1559, 67 L.Ed.2d 732 (1981).

1 DelCostello, 462 U.S. at 154-55, 103 S.Ct. at 2285-86, 76 L.Ed.2d

at 482-83.

——E—_—

13a

and collusion which kept this knowledge from them or

what and how they found out about it.

Pilots begin by arguing that where fraud and collusion

have been alleged, DelCostello is inapplicable and a two

year statute of limitations set forth in the RLA applies.”

Brock v. Republic Airlines, Inc.,'* the only case pilots cite

for this proposition, does not go nearly as far as pilots

would take it. The RLA’s statute of limitations applies

only to actions arising under its own provisions; pilots

have not alleged a violation of those provisions. The

“fraud and collusion” Brock alleged denied him a fair

hearing before the National Railroad Adjustment Board

which issued the order Brock appealed.’* Pilots do not

appeal an Adjustment Board order, nor do they allege

fraud and collusion in connection with such an order. In

short, their claims fall entirely outside the parameters of

Brock.

Even though DelCostello does apply, and not Brock’s

two year limitations period, pilots nevertheless argue that

they meet the six month statute of limitations. Eight

months after the DFR claim was dismissed, pilots moved

for reconsideration of the dismissal arguing that the trial

court had “apparently overlooked the doctrine of equitable

tolling in its ruling.”** Pilots argued that the statute

should have been tolled until a time less than six months

245 U.S.C. § 153 (First) (r), the section pilots claim is appli-

cable, provides:

All actions at law based upon the provisions of this section

shall be begun within two years from the time the cause of

action accrues under the award of the division of the Adjust-

ment Board, and not after. ’

8776 F.2d 523, 526-27 (5th Cir.1985).

Jd. Such a cause of action is specifically provided for in 45

U.S.C. $153 (First) (p) and therefore subject to the two year

limitation period established in 45 U.S.C. § 153 (First) (r).

1 R. 1110.

l4a

before they filed suit because the defendants had fraudu-

lently concealed the facts that gave rise to their cause of

action. The trial court found that their motion had no

merit because the issue was not adequately raised when

the claims were initially disposed of and pilots failed to

show a proper basis for the exercise of equitable tolling.

We agree.

Allegations of fraudulent concealment do not free

plaintiffs of their obligation to exercise reasonable dili-

gence to discover frauds perpetrated against them once

they are on notice that such acts might have occurred.”

Plaintiffs’ own affidavits submitted before the summary

judgment and with the motion for reconsideration show

they were on “inquiry notice” if not actual notice of the

acts that form the basis of their DFR claim for much

longer than six months before they filed suit.

For example, plaintiffs allege that Huttinger misrepre-

sented that the Pilots’ Agreement would be subject to

ratification in July 1985; pilots knew by August 3, 1985

that the agreement was to be immediately implemented

16 Jensen v. Snellings, 841 F.2d 600, 607 (5th Cir.1988), reh’g

granted in part (unpublished opinion).

[A]n act of concealment should not relieve the plaintiff of his

duty to exercise reasonable diligence to discover the fraud....

Concealment by the defendant is only a factor to be considered

in determining when the plaintiff should have discovered the

fraud.

The requirement of diligent inquiry imposes an affirmative

duty upon the potential plaintiff .... <A plaintiff who has

learned of facts which would cause a reasonable person to in-

quire further must proceed with a reasonable and diligent

investigation, and is charged with the knowledge of all facts

such an investigation would have disclosed. (Citations omitted).

Although Jensen dealt with alleged securities fraud, is reasoning

extends to this situation. Like investors, employees “are not free

to ignore storm warnings” that would alert a reasonable employee

to the possibility of fraud. Id.

Pe Maa ae PT

l5a

without ratification.’ Haffner, one of the pilots, was

aware in July or August 1985 that Huttinger and ALPA

had no alternative but to take the buyout. ALPA would

not support the pilots through a strike because (i) ALPA

was financially depleted and could not afford to do so

and (ii) ALPA had been threatened with suit by TACA

and ALPA’s legal department felt they would lose.'* In

the spring of 1985, while negotiations were ongoing,

Zyriek—another pilot—learned from a vice president of

TACA that Huttinger was not qualified to represent the

pilots and that Huttinger and Padgett were lying to the

pilots about the course of the negotiations.’®

At least some of the pilots were informed about the

events taking place and potential problems with the nego-

tiations. Many of the pilots also declared that they were

aware of and asked by ALPA to participate in sabotage

of TACA equipment. This alone should have put them

on notice that things were not as they should be. Finally,

First Federal Savings and Loan Assoc. of Miami v. Mort-

gage Corp. of the South*® holds that ignorance of one

aspect of an alleged fraud, where many other facts were

known, is insufficient to delay the running of the statute.

Given these allegations, there is no question that the

pilots were on inquiry notice of the labor law claims

they raised in this suit in the spring or summer of 1985.

Pilots have not alleged or provided any proof which

would tend to show that defendants actively concealed

their conduct or that the pilots exercised reasonable dili-

gence, from that time until less than six months before

17 See Amended Complaint at J] 41-42, R. 495-96; ALPA’s State-

ment of Material Facts Not in Dispute at 10, R. 571 and Pilots’

Controverted Statements at f 10, R. 727.

18 Declaration of Bert Haffner, R. 1179-1181.

19 See Declaration of Gary Zyriek, R. 1196-98.

20 650 F.2d 1376, 1878-79 (5th Cir.Unit B 1981).

16a

they filed suit, in order to learn of their legal claims.”

The trial court did not abuse its discretion in failing to

grant reconsideration. No fact issues regarding the

pilots’ exercise of diligence in finding the grounds of their

complaint were presented for resolution.

Pilots’ fourth argument measures the actions of ALPA

and TACA against an injunction. In 1983, El Salvador

adopted a new Constitution which required Salvadoran

public service companies to have their bases in E] Salva-

dor. Pursuant to that new requirement, TACA attempted

to move its pilots base to San Salvador. ALPA immedi-

ately sought an injunction against the move which was

granted by the district court and upheld by the Fifth Cir-

cuit. The injunction did not prevent TACA from relo-

cating its base. It simply provided that “TACA must

relocate its pilot base, and effect the other intended steps

in accordance with the substantive law and procedures set

forth in the Railway Labor Act and other relevant do-

mestic laws.” ** The pilots contend that TACA effected

its move in violation of the RLA and thus is in violation

of the injunction.

Pilots did not raise this issue until February 1987—

long after they had filed this action. We find that the

courts below acted properly in refusing to reopen that

21 United Klans of America v. McGovern, 621 F.2d 152, 153 (5th

Cir.1980) :

Fraudulent concealment tolls the statute of limitations. To rely

on this tolling doctrine, “plaintiff must show that the defend-

ants concealed the conduct complained of, and that he failed,

despite the exercise of due diligence on his part, to discover the

facts that form the basis of his claim.”

Citing In re Beef Industry Antitrust Litigation, 600 F.2d 1148, 1169

(5th Cir.1979).

22 See Airline Pilots Ass’n International, AFL-CIO v. TACA In-

ternational Airlines, S.A., 748 F.2d 965 (5th Cir.1984), cert. denied,

471 U.S. 1100, 105 S.Ct. 2324, 85 L.Ed.2d 842 (1985).

23 Jd. at 972.

17a

ease. The issues involved in the old case and the current

one are not substantially similar and the parties are dif-

ferent—only TACA was bound by the injunction. A

transfer or consolidation to resolve this issue would have

complicated the case—not simplified it.

Pilots’ final argument against the operation of Del-

Costello and the bar of the six month statute of limita-

tions is to classify the actions of ALPA and TACA as an

improper attempt to decertify ALPA as the bargaining

agent for the pilots. In this guise, pilots argue that the

rationale of DelCostello is inappropriate.

Disputes which involve the determination of the certi-

fied representative of airline employees in collective bar-

gaining and contract administration are classified by the

RLA as “representation” disputes. Such disputes are gov-

erned by Section 2, Ninth of the RLA,* which provides

that “it is the duty of the [National Mediation] Board

to investigate any dispute as to who is the collective

bargaining representative of employees and to certify

the organization properly designated.” ** We have no

jurisdiction over this claim.

The Act commits disputes involving a determination

of who is to represent airline employees in collective

bargaining to the exclusive jurisdiction of the Na-

tional Mediation Board. A court may not entertain

an action involving such a dispute even if it arises

in the context of otherwise justiciable claims.”

2#Pilots do not explain why they believe this characterization

makes DelCostello inapplicable, nor do they state which statute of

limitations then becomes applicable or why. We respond to pilots’

arguments without the need to answer these questions.

2545 U.S.C. § 152, Ninth.

26 International Bhd. of Teamsters, Chauffeurs, Warehousemen &

Helpers of America v. Texas International Airlines, Inc., 717 F.2d

157, 159 (5th Cir.1983).

27 Jd. at 161 (citations omitted).

18a

In conclusion, we hold that pilots’ labor law claims

were time barred. A straight-forward application of Del-

Costello, as it has evolved, compels this result. The re-

mainder of pilots’ arguments—equitable tolling, enforce-

ment of a prior injunction, and wrongful decertification

of ALPA—avail them not at all.

Ill. Erisa Claims

A. Dida “Plan” Exist Before April 18, 1985?

The fiduciary obligations created by Title I of ERISA

apply only to established “plans.” Section 401(a), 29

U.S.C. §1101(a) (fiduciary responsibilities apply to em-

ployee benefit plans) ; Section 4(a), 29 U.S.C. § 1003(a)

(“this subchapter shall apply to any employee benefit plan

if it is established or maintained” by an employer, em-

ployee organization, or both) (emphasis added). Deci-

sions as to whether or when to establish a plan, or how to

design a plan, are not subject to any ERISA fiduciary

obligation.** Nor does any fiduciary obligation arise dur-

ing the negotiation or execution of an agreement regard-

ing future pension benefits.” Thus, we must determine

when the retirement plan for the TACA pilots went into

effect, so that we can decide when any fiduciary duties

may have been created.

A pension plan subject to ERISA is one which is

“established or maintained by an employer or by an

28 See UMWA Health & Retirement Funds v. Robinson, 455 U.S.

562, 573-76, 102 S.Ct. 1226, 1232-34, 71 L.Ed.2d 419 (1982); NLRB

v. Amazx Coal Co., 453 U.S. 322, 334-38, 101 S.Ct. 2789, 2797-98, 69

L.Ed.2d 672 (1981) ; United Independent Flight Officers, Inc. (UIFO-

I), 756 F.2d 1262, 1266-69; Moore v. Reynolds Metal Co. Retirement

Program, 740 F.2d 454, 456 (6th Cir.1984) cert. denied, 469 U.S.

1109, 105 S.Ct. 786, 83 L.Ed.2d 780 (1985).

29 UIFO-I, 756 F.2d at 1268; United Independent Flight Officers,

Inc. v. United Air Lines, Inc., 756 F.2d 1274, 1280 (7th Cir.1985) ;

Sutton v. Weirton Steel Division of National Steel Corp., 567 F.Supp.

1184, 1201 (N.D.W.Va.), aff'd, 724 F.2d 406 (4th Cir.1983), cert.

denied, 467 U.S. 1205, 104 S.Ct. 2387, 81 L.Ed.2d 345 (1984).

19a

employee organization or both” to provide retirement

income to employees. Section 3(21) (A), 29 U.S.C. § 1002

(21) (A). ALPA cites Donovan v. Dillingham, 688 F.2d

1367, 1873 (11th Cir. 1982) (en banc), for the proposi-

tion that a plan is “established” if, “from the surround-

ing circumstances a reasonable person could ascertain”

the following four elements: “the intended [i] benefits,

ii] beneficiaries, [iii] source of financing, and [iv] pro-

cedures for receiving benefits.” *°

On February 2, 1982, ALPA and TACA entered a

“Letter of Agreement” in which they agreed to establish

a retirement plan for all TACA pilots. However, a for-

mal retirement plan was not implemented until April 18,

1985, when TACA and ALPA executed the “TACA In-

ternational Air Lines, S.A. Pilots’ Retirement Plan and

Trust” (the Plan). The 1982 “Letter of Agreement” pro-

vided that TACA would contribute $75,000 a year to a

fund for the pilots’ retirement plus a variable amount

depending upon the number of pilots listed on the senior-

ity list and whether a second B-737 aircraft was acquired.

TACA’s obligation to make monthly contributions com-

menced on March 31, 1982. “[U]ntil such time as the

retirement plan for pilots has been established and imple-

mented,” TACA’s contributions were to be deposited in

an institution named by ALPA to be held in trust for the

benefit of the retirement plan. “The “Letter of Agree-

ment” was effective from February 25, 1982 to February

25, 1987, at which time the agreement would be subject

to renewal.

Since the 1982 agreement did not describe the intended

benefits or procedure for receipt of benefits, (although

it does impart the source of financing and the beneficiar-

3° Accord Rasmussen v. Metropolitan Life Ins. Co., 675 F.Supp.

1497, 1500 (W.D.La. 1987) ; Ogden v. Michigan Bell Telephone Co.,

657 F.Supp. 328, 332 n. 3 (E.D.Mich.), appeal dismissed, 829 F.2d

1126 (6th Cir.1987).

20a

ies), ALPA argues that there was no plan until the sign-

ing of the 1985 retirement plan, which satisfies all four

of the Dillingham requirements.”

Our opinion in no way undermines Dillingham’s hold-

ing that a plan is established if “from the surrounding

circumstances a reasonable person can ascertain the in-

tended benefits, a class of beneficiaries, the source of fi-

nancing, and procedures for receiving benefits.” Jd. at

1373. But in our case the issue is not if a plan has been

established as in Dillingham, (because it is undisputed

that an ERISA-covered plan was eventually established),

but rather when the plan was established, taking into

consideration the retroactivity provision in the 1985 re-

tirement plan.”

ALPA also argues that the “circumstances” surround-

ing the February, 1982 Letter of Agreement, as reflected

in its terms, prove that a plan was not established at that

time. In particular, ALPA points to the following lan-

guage of the 1982 Agreement to support its claim that

a pension plan was to be created at some time in the

future, and not by the 1982 Agreement itself: “the

specifics of the retirement plan for the pilots shall be

determined . . .”; TACA’s contributions would be held

in trust “until such time as the requirement plan for

pilots has been established and implemented”; and “{a]}t

that time the Company’s required monthly contributions

31 In Dillingham, an en bane Eleventh Circuit held that employers

and unions that subscribed to a group insurance trust to furnish

health insurance for employees or members, “established employee

welfare benefit plans” for purposes of deciding subject matter juris-

diction over ERISA claims. Dillingham, 688 F.2d at 1374.

32 Of course, this distinction can easily be collapsed by recognizing

that a plan is normally established when all of the requirements for

a plan are met. But the distinction is useful here because there is

no contention that all of the requirements for a plan were met by

1985.

2la

shall be made to the retirement plan for pilots.” (Em-

phasis added by ALPA) .*

%8 The more complete version of relevant provisions of the 1982

Agreement are as follows:

LETTER OF AGREEMENT

between

TACA INTERNATIONAL AIRLINES, S.A.

and

THE AIR LINE PILOTS

in the service of

TACA INTERNATIONAL AIRLINES, S.A.

as represented by

THE AIR LINE PILOTS ASSOCIATION

INTERNATIONAL

THIS LETTER OF AGREEMENT is made and entered into

in accordance with the provisions fo the Railway Labor Act as

amended, by and between TACA INTERNATIONAL AIR-

LINES, S.A. (hereinafter referred to as the “Company”) and

the AIR LINE PILOTS in the services of TACA INTERNA-

TIONAL AIRLINES, S.A. as represented by the AIR LINE

PILOTS ASSOCIATION, INTERNATIONAL (hereinafter re-

ferred to as the “Association”).

> * > * > *

1. The Company will fund a retirement plan for all pilots of

the Company on the seniority list as of February 1, 1982 and

any pilots added to the seniority list thereafter. The Company

contributions to the plan shal! be as follows:

(a) $75,000 per year, and

(b) an additional $25,000 per year when second B-737 air-

craft is acquired by (i.e. owned by or leased to) the Company,

and

ity list in excess of fifty (50) pilots and

(d) all obligations coming due under clauses (a), (b), and

on the last business calendar day of the month and each such

payments prorated to any increased obligation.

* > * * * >

5. The specific of the retirement plan for pilots shall be de

termined by the Association provided that the plan receives

22a

We can ignore the implications of these terms in the

1982 Letter of Agreement, however, because the April,

1985 retirement plan is explicitly retroactive to Febru-

ary, 1982. The very first sentence of the 1985 retire-

ment plan states that TACA “established a pension plan

for its Pilots” on February 1, 1982. The retirement

plan unambiguously makes the plan’s Effective Date as

February 1, 1982.* All pilots employed on the Effective

I.R.S. qualification and it treats all pilots in a fair and equitable

manner.

6. The Company contributions required by Paragraphs 1 and

4 above shall be deposited in a trust account established in an

institution to be named by the Association to be held in trust

by that institution for the benefit of the retirement plan for

pilots until such time as the retirement plan for pilots has been

established and implemented. At that time the Company’s re-

quired monthly contributions shall be made to the retirement

plan for pilots.

* * o * - *

%4 Article 1.1 of the TACA INTERNATIONAL AIRLINES, S.A.

PILOTS RETIREMENT PLAN AND TRUST provides:

Establishmen and Name of the Plan and Trust—TACA INTER-

TERNATIONAL AIRLINES, S.A., (hereinafter referred to as

the “Company”), on February 1, 1982, established a pension

plan for its Pilots, which, as it may be amended from time to

time, is known as the TACA International Airlines, S.A. Pilots

Retirement Plan and Trust.

85 Article II—( Definitions) defines “Effective Date”:

The term ‘Effective Date’ means February 1, 1982, the date

on which the provisions of this Plan are effective.

Other provisions support the view that the 1985 Plan is retro-

active to 1982. “Future Service” is defined as “a Pilots” aggre-

gate period of employment as a Pilot on or after February 1,

1982, including approved leaves of absence and furloughs.”

“Past Service” is defined as “a Pilot’s aggregate period of

employment as a Pilot prior to February 1, 1982, including

approved leaves of absence and furloughs; provided, however,

that a Pilot’s total Past Service which may be credited under

the Plan shall not exceed twenty (20) years.”

“Pian Year” is defined as “the twelve (12) month period

commencing each January 1st and ending on the following De-

Date are eligible to participate in the Plan.” We will

not interfere with the intent of the parties to make the

Plan effective on February 1, 1982. Thus, we instruct

the court on remand to accept as a matter of law that

the Plan was in effect on February 1, 1982.

B. Did TACA, ALPA and Huttinger Have Any Fidu-

ciary Duties Under the Retirement Plan?

Finding a need for greater protection of employees

covered by benefit plans, Congress enacted ERISA in

1974. 29 U.S.C. §§ 1001 et seg. In so doing, Congress

sought to protect “the interests of participants in private

pension plans and their beneficiaries by improving the

equitable character and the soundness of such plans.” 29

U.S.C. § 1001(c).*7 ERISA is therefore to be construed

cember 31st. However, the first Plan Year shall commence

February 1, 1982 and end December 31, 1982.”

4.1 Company Contributions—The Company shall contribute

to the Plan such amounts as shall be required by the Letter of

Agreement between TACA INTERNATIONAL AIRLINES,

S.A. and the AIR LINE PILOTS in the service of TACA IN-

TERNATIONAL AIRLINES, S.S. as represented by THE AIR

LINE PILOTS ASSOCIATION, INTERNATIONAL in effect

as of February 24, 1982 and as subsequently amended or re-

placed, in accordance with the funding standards of the Internal

Revenue Code and ERISA.

36 However, one year of service is required before eligibility:

8.1 Eligibility—Each person who is employed as a Pilot on

the Effective Date and who, as of the Effective Date, has com-

pleted one year of Past Service, shall participate in this Plan

as of the Effective Date.

37 Amending ERISA in 1986 with the Single-Employer Pension

Plan Amendment Act, (SEPPAA) Title XI of Pub. L. No. 99-272,

tit. XI, 100 Stat. 237 (1986), Congress declared that the policy of

the legislation was “to increase the likelihood that participants and

beneficiaries under single-employer defined benefit pension plans

will receive their full benefits.” 29 U.S.C. § 1001b(c)(3) (Supp. VII

1989). Another declaration of policy under SEPPAA was “to pro-

24a

liberally to safeguard the interests of fund participants

and beneficiaries, and to preserve the integrity of fund

assets. This court has previously held that a liberal con-

struction of ERISA is in keeping with its remedial pur-

poses.**

Section 3(21)(A) of ERISA, 29 U.S.C. § 1002(21)

(A), provides that a “person” is a fiduciary only “to the

extent” he

(1) exercises discretionary control or authority over

the management of the Plan or the Plan’s disposition

of its assets, (2} renders investment advice with re-

gard to assets of the plan, or (3) has discretionary

authority or responsibility in the administration of

the plan.”

In Sommers Drug Stores, Co. Employee Profit Sharing

Trust v. Corrigan Enterprises, Inc., 793 F.2d 1456, 1459-

60 (5th Cir.1986), reh’g den., 797 F.2d 977 (5th Cir.

1986), cert. denied, 479 U.S. 1034, 107 S.Ct. 884, 93

L.Ed.2d 887 (1987), we held that “[t]he phrase ‘to the

extent’? indicates that a person is a fiudciary [under

ERISA] only with respect to those aspects of the plan

over which he exercises authority or control.” **° The court

below applied 3(21)(A) and Sommers to conclude that

neither TACA nor ALPA had any fiduciary duties “be-

cause the 1985 retirement plan does not establish any

vide for the transfer of unfunded pension liabilities onto the single-

employer pension plan termination insurance system only in cases of

severe hardship.” 29 U.S.C. § 1001b(c)(4) (Supp. VII 1989).

38 American Federation of Unions Local 102 Health & Welfare

Fund v. Equitable Life Assurance Society of the United States, 841

F.2d 658, 662 (5th Cir. 1988); Donovan v. Mercer, 747 F.2d 304,

308 (5th Cir. 1984).

39 Accord Gelardi v. Pertec Computer Corp., 761 F.2d 1323, 1325

(9th Cir. 1985); Brandt v. Grounds, 687 F.2d 895, 897 (7th Cir.

1982); Holland v. Bank of America, 673 F. Supp. 1511, 1518 (S.D.

Cal. 1987).

25a

power or authority on behalf of TACA or ALPA, nor has

any such authority or power been demonstrated to have

been exercised in fact.” Landry v. ALPA, No. 86-3196,

slip op. at p. 9 (E.D.La. Apr. 24, 1987) (mem.) A gen-

uine issue of material fact *° existed as to whether TACA,

ALPA, and Huttinger had any fiduciary duties under

ERISA that would make them liable for the wrongs

alleged in the pilots’ complaint.

Initially, we must emphasize that fiduciary status is to

be determined by looking at the actual authority or power

demonstrated, as well as the formal title and duties of

the party at issue. As described in the legislative history

of ERISA, “the definition [of ‘fiduciary’] includes per-

sons who have authority and responsibility with respect

to the matter in question, regardless of their formal title.”

H.R.Conf.Rep. No. 93-1280, 93d Cong., 2nd Sess., re-

printed in 1974 U.S.Code Cong. & Admin.News 4639,

5038, 5103. Thus “fiduciary” “should be defined not only

by reference to particular titles such as “plan administra-

tor,” “committee chairman,” or “sponsor,” but also by

considering the authority which a particular person or

entity exercises over the employee benefit plan at issue.

Donovan v. Mercer, 747 F.2d at 308. See also Brink v.

DaLesio, 496 F.Supp. 1350, 1874-75 (D.Md.1980), rev’d

in part on other grounds, 667 F.2d 420 (4th Cir.1982) ;

Leigh v. Engle, 727 F.2d 118, 184 n. 33 (7th Cir.1984)

(“we think ERISA directs courts to look beyond . . . for-

mal authority with respect to the plan. . . to consider

what real authority they had over plan investments .. .’’).

*° In a practice all too common in summary judgment decisions,

the trial court made no mention of the standard it was applying to

reach its decision. Assuming that the appropriate standard for a

rule 56(c) motion was being tacitly applied, it would behoove the

district court to spell out that “no genuine issues as to any material

fact” could be found in support of plaintiff’s case. F.R. Civ. P.

56(c). See also, S. Childress & M. Davis, Standard of Review 310

(Wiley & Sons 1986). Such judicial pedagogy might reduce the

frequency of the same omission in briefs, motions, etc.

26a

The fact that someone is a fiduciary under a retirement

plan does not necessarily mean he is a fiduciary with

respect to all of the obligations under the plan. As we

stressed in Sommers, 793 F.2d at 1459, the key language

in the statutory definition is that a person is a fiduciary

“to the extent” he or she exercises control over the plan.

The Secretary of Labor explained this language in a bul-

letin interpreting ERISA, which was published in the

Code of Federal Regulations. In this bulletin, the Secre-

tary was asked the following question and gave the fol-

lowing response:

D-4 Q: In the case of a plan established and main-

tained by an employer, are members of the board of

directors of the employer fiduciaries with respect to

the plan?

A: Members of the board of directors of an em-

ployer which maintains an employee benefit plan will

be fiduciaries only to the extent that they have re

sponsibility for the functions described in section 3

(21)(A) of the Act. For example, the board of

directors may be responsible for the selection and

retention of plan fiduciaries. In such a case, mem-

bers of the board of directors exercise “discretionary

authority or discretionary control respecting manage-

ment of such plan” and are, therefore, fiduciaries

with respect to the plan. However, their responsi-

bility, and consquently, their liability, is limited to

the selection and retention of fiduciaries (apart from

co-fiduciary liability arising under circumstances de-

scribed in section 405(a) of the Act). In addition,

if the directors are made named fiduciaries of the

plan, their liability may be limited pursuant to a

procedure provided for in the plan instrument for

the allocation of fiduciary responsibilities among

named fiduciaries or for the designation of persons

other than named fiduciaries to carry out fiduciary

responsibilities, as provided in section 405(c) (2).

27a

The Internal Revenue Service notes that it would

reach the same answer to this question under section

4975(a)(3) of the Internal Revenue Code of 1954.

ERISA Interpretive Bulletin 75-8, 29 CFR § 2509.75-8

(1983) (emphasis supplied).

While the fiduciary duty of a board of directors is not

directly at issue in our case, the excerpted dialogue from

the bulletin illustrates the important parameters and limi-

tations of fiduciary responsibility. Thus, it will be the

task of the court on remand to determine precisely the

extent, as a factual matter, of actual fiduciary authority

possessed or exercised by ALPA, Huttinger, and TACA

with respect to the wrongs alleged by the pilots. The

pilots’ complaint maintains the following four wrongs as

a consequence of ERISA violations: **

(i) delay in implementation of the retirement plan

for three years; (ii) failure and refusal to discuss

or disclose the Plan and its benefits to the Pilots

upon repeated requests; (iii) failure to disclose the

amount of contributions by TACA, where the funds

were deposited, the type of investment account and

interest rates the invested funds received; and (iv)

collusion between TACA, ALPA, and FBA to allow

Huttinger to receive benefits to which he was not

legitimately entitled.”

1. Too Slow

Although, as we determined above, the Plan was in

effect in February, 1982, a detailed retirement plan lay-

*1 Of course, to the extent the district court allows the pilots to

amend their complaint on remand pursuant to F.R. Civ. P. 15, this

list of alleged wrongs may be expanded.

#2 FBA is only an intervenor in this appeal. See infra. The origi-

nal Complaint alleged collusion between ALPA, FBA, and Huttinger.

The amended Complaint, however, implicates TACA in this collusion

to improperly provide Huttinger with funds.

28a

ing out the rights and obligations of the parties was not

implemented until over three years later.“* In August of

1984, FBA was contacted by ALPA about a possible con-

tract to perform retirement plan services. On October 30,

1984, a Plan Services Agreement was entered between

ALPA and FBA delineating specific services that FBA

would provide under the Plan. In this Plan Services

Agreement, FBA agreed to take “all the steps required

to make the plan and trust operative.”

However, while FBA’s duties under the Plan are retro-

active to February, 1982, any fiduciary obligations under-

taken by FBA in the Plan Services Agreement do not

begin until October 30, 1984. Thus, assuming without

deciding that FBA had a fiduciary duty to implement the

Plan beginning on October 30, 1984, there is still a dis-

puted fact issue as to which party had the responsibility

to implement the Plan from February, 1982 until the

signing of the Plan Services Agreement.** If the trial

court on remand discovers that TACA, ALPA, or Hut-

tinger formally possessed or actually assumed any fidu-

ciary duty with respect to implementing the Plan, then

they will be potentially liable for any damages resulting

from the delay in implementation.

2. Didn’t Show

The pilots’ alleged that Charles Huttinger refused to

discuss or disclose the Plan and details about its benefits

despite repeated requests. Huttinger was appointed to

the pilots’ retirement committee which, according to sec-

43 In an inquiry filed with the U.S. Department of Labor, Division

of Technical Assistance, Bert Haffner, one of the plaintiff TACA

pilots, complained of an “unusual time delay and lapse from time

of incepiton (1 Feb. 82) to the time of issuance of plan outline (16

April 85).” R. 1183.

44 There is nothing in either the “Letter of Agreement” or the

Plan itself that imposes a fiduciary duty to implement the Plan.

29a

tion 12.4 of the Plan,*® was charged with interpreting and

construing the Plan, determining questions of eligibility

and rights of participants and their beneficiaries, and

providing guidelines for the plan administrator as re-

quired for the orderly and uniform administration of the

Plan.

The affidavit of Bert Haffner, one of the TACA pilots,

declares that Huttinger “refused to supply [him] with a

copy of the retirement plan or tell [him] how to get one”

despite repeated requests. R. 1179. In July or August of

1985, Haffner met with Huttinger at his home “in order

to obtain his help in applying for all benefits [that he]

might be eligible for.” R. 1180. Haffner claimed that he

“did this in accordance with recommendations in ALPA

manuals, to contact the union chairman for help in apply-

ing for benefits.” R. 1180.

Another pilot, Jules Corona, declared that despite nu-

merous requests, he “was never given any information as

to where the TACA contributed retirement funds were

held in -Trust, nor when the plan was implemented, nor

any of the ERISA required disclosure information until

after the August 1, 1985 termination date of the plan.”

R. 308.

Huttinger clearly assumed both a de facto and a de

jure role in construing the Plan and informing the pilots

about its contents. Thus, we find as a matter of law that

Huttinger had a fiduciary duty to disclose information

about the Plan to the pilots when asked. Whether he

breached that fiduciary duty must be resolved on remand.

4512.4 Retirement Committee—In order to assist in the ad-

ministration of the Plan, the Association shall appoint a Retirement

Committee to:

(a) interpret and construe the Plan;

(b) determine questions of eligibility and of rights of Partici-

pants and their Beneficiaries ;

for the orderly and uniform administration of the Plan.

80a

3. Couldn’t Know

ALPA argues that it is not a fiduciary with respect to

the alleged failure to disclose information about the Plan

and its assets because the Plan charged the Plan Adminis-

trator, FBA, with the day-to-day administration of the

Plan, and consistent with Section 101 of ERISA, 29

U.S.C. § 1021,** with specific responsibility for providing

participants in the Plan with all information required by

law, including information and reports regarding the Plan

and its assets.*?

However, while the responsibility for notifying bene

ficiaries and participants with Plan information formally

fell upon FBA, there are indications that FBA’s actual

authority over Plan matters was (at least sometimes)

46§ 1021. Duty of disclosure and reporting

(a) Summary plan description and information to be fur-

nished to participants and beneficiaries

The administrator of each employee benefit plan shall cause

to be furnished in accordance with section 1024(b) of this title

to each participant covered under the plan and to each bene-

ficiary who is receiving benefits under the plan—

(1) a summary plan description described in section 1022

(a) (1) of this title; and

(2) the information described in section 1024(b)(3) and

1025(a) and (c) of this title.

47 Formal responsibility to notify beneficiaries and participants

about the Plan falls on FBA.

9.8 Powers, Duties and Responsibilities of the Plan Adminis-

trator—The specific powers and responsibilities of the Plan

Administrator are to:

* * * * * *

summaries, descriptions, announcements and reports as are re-

quired to be given to Participants under applicable laws and

regulations;

Our opinion decides nothing with respect to FBA. See infra.

Ore eee re

Eye et te

3la

subordinated to and dependent upon decisions by ALPA.*®

For example, when the president of FBA, Richard Wat-

son, was asked why Huttinger was able to apply for and

begin receiving benefits in November of 1985, but Haffner

48 The Plan plainly gives ALPA sore fiduciary duties. Article

11.2 of the Plan gives ALPA the authority to terminate the plan and

the trust by an instrument in writing signed by the president of

ALPA or his designee for such purpose. R. 1389.

Article 11.2 provides:

Termination of Plan and Trust—“This Plan and Trust may be

terminated by an instrument in writing signed by the President

of the Association or his designee for such purpose. Notwith-

standing the foregoing, the Plan shall automatically terminate

in the event of a complete discontinuance of contributions by

the Company. Upon the termination or partial termination of

the Plan, the rights of all affected Participants and Beneficiaries

to benefits accrued to the date of such termination, partial ter-

mination of the Plan, the rights of all affected Participants and

Beneficiaries to benefits accrued to the date of such termination,

partial termination, or discontinuance, to the extent funded as

of such date, are nonforfeitable.”

ALPA has the sole authority and control to remove and appoint the

Trustee, the Plan Administrator and the Investment Manager.

Article 9.5(a) provides: The Association is empowered to ap-

point and remove the Trustee, the Plan Administrator and the

Investment Manager as it deems necessary for the proper ad-

ministration of the Plan, to assure that the Plan is being op-

erated for the exclusive benefit of the Participants and their

Beneficiaries in accordance with the terms of this Agreement,

the Internal Revenue Code and ERISA.

Article 9.5(c) explicitly provides for the discretion of ALPA:

“The Association may in its discretion appoint an Investment

Manager to manage all or a designated portion of the assets of

the Plan. In such event, the Trustee shall follow the directives

of the Investment Manager in investing the assets of the Plan

managed by the Investment Manager. While there is an Invest-

ment Manager, the Association shall have no obligation under

this Plan with regard to the performance or non-performance

of the duties delegated to the Investment Manager.”

32a

was not allowed to do the same, Watson reportedly ex-

plained “that was the way ALPA had told him to do it.” *

Even if the actual fiduciary duty to disclose informa-

tion about the Plan falls upon FBA, its failure to notify

Plan participants and beneficiaries may not constitute a

breach of that duty because ALPA and TACA undertook

an obligation to keep FBA informed about certain mat-

ters. If ALPA failed to do so, FBA may have been pre-

vented from fulfilling its fiduciary duty to notify the bene-

ficiaries and participants.

Similarly, in the Plan, TACA agrees to supply “full

and timely information to the Plan Administrator on all

matters relating to the compensation of all Participants,

their periods of service, their retirement, death, disability

49 Bert Haffner provided this information about his conversation

with Watson. R. 1181.

50 Sections 3 and 4 of the Plan Services Agreement provide in

full:

3. Obtaining Information—The Association agrees to furnish

information or data which FBA requests in order to perform

services under this Agreement within 90 days of the initial

request or FBA will rot be held responsible for services under

this Agreement. FBA reserves the right to require that data

be furnished over the signature of an authorized official of the

Association or the entity or representative providing the data

on behalf of the Association.

FBA reserves the right to reject information or data which it

considers unsuitable for processing. FBA’s sole responsibility,

in this regard, shall be to forward questionnaires and forms as

necessary to the Association on a timely basis, enabling the

Association to provide the information needed.

4. Liability for Information—The Association shall provide

complete, accurate and timely information, upon which informa-

tion FBA may rely fully. The Company and the Association

shall indemnify and hold FBA harmless for errors, omissions,

and inaccurate or incomplete reports completed, based on in-

accurate, incomplete or untimely information furnished by the

Company and the Association.

33a

or termination of employment, and such other pertinent

duty on the part of TACA arising under § 9.9 (or any

other section) of the Plan is unenforceable, because TACA

is neither a signatory nor a party to the Plan.”

The trial court on remand must determine the actual

fiduciary duties assumed by ALPA and TACA with re-

spect to providing FBA and the Plan beneficiaries and

participants with information under the Plan.™

4. Where'd the $ Go?

A genuine issue of material fact exists as to whether

TACA and ALPA colluded with Huttinger in order to

provide him with retirement benefits. As discussed supra,

51 Plan § 9.9 provides:

9.9 Information From Company—To enable the Plan Ad-

ministrator to perform his functions, the Company shall supply

full and timely information to the Plan Administrator on all

matters relating to compensation of all Participants, their pe-

riods of service, their retirement, death, disability, or termina-

tion of employment, and such other pertinent facts as the Ad-

ministrator my require; and the Administrator shall advise

the Trustee and the Investment Manager of such of the fore-

going facts as may be pertinent to their duties under the Plan.

Subject to Section 9.2, all fiduciaries may rely upon such in-

formation as is supplied by the Company and shall have no

duty or responsibility to verify such information.

52 Merely because TACA was not a party to the Plan does not

preclude a finding that TACA was a fiduciary with respect to the

Plan. If further facts discovered on remand reveal that TACA

undertook actual obligations to notify in accordance with § 9.9 of

the Plan, then TACA will be a fiduciary to that extent. See Section

11.B.4. Where’s the $ Go?

53 In a memorandum responding to ALPA’s motion to dismiss,

FBA, a defendant below, admitted that “[a] factual determination

is required to determine whether those disclosures [pertaining to

the Plan] were made.” FBA also asserted: ‘Factual determinations

abound in the delegation issue, pretermitting summary judgment on

that basis.” R. 1191.

84a

Frank Landry declared in an affidavit that each party to

the alleged collusion was motivated by different factors.

According to Landry, TACA threatened civil suit and

criminal prosecution against ALPA for the intentional

damage of TACA’s engines by some of the ALPA pilots.™

In return for ALPA’s accepting the 1986 Pilots’ Agree-

ment, TACA agreed not to carry out this threat. TACA,

meanwhile, would be able to move its pilot base to El

Salvador and avoid its obligations under the Plan.

Landry further claimed that Huttinger was offered

benefits to which he would otherwise not have been en-

titled as an incentive for him to vote against the pilots’

interests. If such collusion did occur, then TACA, ALPA,

and Huttinger are implicated as fiduciaries under 3(21)

(A) because they would have exercised actual control

over the disposition of the assets of the Plan. In other

words, by alleging colluding to provide Huttinger with re-

tirement benefits, ALPA, TACA, and Huttinger became

fiduciaries over the distribution of Plan funds, even if

they are not listed as fiduciaries with respect to that

function.

C. Breach of Fiduciary Duties

Plan fiduciaries are statutorily prohibited from dealing

with Plan assets in their own interest. Moreover, the

% These al.egations are discussed more fully in the RICO section,

infra.

55§ 1106. Prohibited transactions

* * * 7 * *

(b) Transactions between plan and fiduciary

A fiduciary with respect to a plan shall not—

(1) deal with the assets of the plan in his own interest or

for his own account,

(2) in his individual or in any other capacity act in any

transaction involving the plan on behalf of a party (or repre-

85a

Plan fiduciaries agreed to “discharge [their] duties solely

in the interest of the Participants and their Beneficiaries”

and to act “for the exclusive purpose of providing benefits

to Participants.” * To the extent that ALPA and TACA

sent a party) whose interests are adverse to the interests of the

plan or the interests of its participants or beneficiaries, or

(3) receive any consideration for his own personal account

from any party dealing with such plan in connection with a

transaction involving the assets of the plan. 29 U.S.C. § 1106

(b).

56 Article 9.2 provides in relevant part:

General Fiduciary Duties—Each Plan fiduciary will discharge

his duties solely in the interest of the Participants and their

Beneficiaries and act: (a) for the exclusive purpose of provid-

ing benefits to Participants and their Beneficiaries and defray-

ing reasonable expenses of administering the Plan; (b) with

the care, skill, prudence and diligence under the circumstances

then prevailing that a prudent person acting in a like capacity

and familiar with such matters would use in the conduct of an

enterprise of a like character and with like aims; .. . No Plan

fiduciary shall engage in any transaction prohibited under

ERISA, the Internal Revenue Code, or any other law.”

This Plan language follows the terms of the ERISA provision on

the standard of care for fiduciaries:

§ 1104. Fiduciary duties

(a) Prudent man standard of care

(1) Subject to sections 1103(c) and (d), 1342, and 1344 of

this title, a fiduciary shal] discharge his duties with respect to

a plan solely in the interest of the participants and beneficiaries

and—

(A) for the exclusive purpose of :

(i) providing benefits to participants and their benefici-

aries ; and

(ii) defraying reasonable expenses of administering the

plan;

(B) with the care, skill, prudence, and diligence under the

circumstances then prevailing that a prudent man acting in

a like capacity and familiar with such matters would use in

the conduct of an enterprise of a like character and with

like aims;

36a

colluded with Huttinger to provide the latter with Plan

benefits, so that the former could serve their own inter-

ests, fiduciary duties were breached under § 1106(b).

Moreover, we must stress that although Sommers lim-

ited the liability of fiduciaries by the “to the extent”

language of § 3(21) (A) this limitation does not apply to

§ 1105(a).’ To illustrate, even if ALPA is only found to

be a fiduciary “to the extent” of appointing and removing

the Plan administrator and Trustee,** ALPA may still be

liable, for example, for the breaches of FBA if ALPA

“partcipat[ed] knowingly in, or knowingly undert [ook]

minimize the risk of large losses, unless under the circum-

stances it is clearly prudent not to do so; and

(D) in accordance with the documents and instruments

governing the plan insofar as such documents and instru-

ments are consistent with the provisions of this subchapter

or subchapter III of this chapter.

29 U.S.C. § 1104(a).

571105. Liability for breach of co-fiduciary

(a) Circumstances giving rise to liability

In addition to any liability which he may have under any

other provision of this part, a fiduciary with respect to a plan

shall be liable for a breach of fiduciary responsibility of another

fiduciary with respect to the same plan in the following circum-

stances:

(1) if he participates knowingly in, or knowingly under-

takes to conceal, an act or omission of such other fiduciary,

knowing such act or omission is a breach;

(2) if by his failure to comply with section 1104(a)(1)

of this title in the administration of his specific responsi-

bilities which give rise to his status as a fiduciary, he has

enabled such other fiduciary to commit a breach; or

(3) if he has knowledge of a breach by such other fiduciary,

unless he makes reasonable efforts under the circumstances

to remedy the breach.

29 U.S.C. § 1105(a).

88 This example is only an illustration to assist the trial court on

remand; it reaches no conclusions.

—————

ee as

nein es

37a

to conceal, an act or omission of [FBA], knowing such act

or omission [was] a breach.” § 1105(a) (1).

D. Status of FBA

The pilots’ case against FBA is still pending in the

district court. FBA has moved for summary judgment

against the pilots’ claims, but the trial court has decided

the motion.” Although the decision appealed herein does

not directly address FBA’s fiduciary status or liability,

FBA has filed an intervenor brief seeking to protect its

interest in the litigation. Basically, FBA appears to be

concerned thai since the trial court found that TACA

and ALPA were not fiduciaries, and dismissed the claim

against Huttinger, the only party remaining upon which

fiduciary duty can be imposed is FBA.

Thus, in its intervenor brief FBA argues that a deter-

mination of whether TACA or ALPA acted in accordance

with the fiduciary provisions of ERISA is neither neces-

sary nor relevant. FBA asserts that allegations of im-

proper plan termination do not raise any ERISA issues—

but rather involve the RLA~—since plan termination is a

mandatory subject of collective bargaining under the

RLA. FBA also claims that the Plan should be placed

into trusteeship by voluntary action of the Pension Bene-

fits Guarantee Corporation (PBGC).

FBA’s arguments are unconvincing. The ERISA claim

against ALPA and TACA on which the Court below ruled

—the only ERISA ruling before us on appeal—only con-

cerned action taken prior to Plan termination. Because

the District Court’s ruling properly confined itself to the

claims before it, and did not address any ERISA claim

related to Plan termination, there is no ERISA “finding”

59 In expectation of an appellate opinion that would be forced to

explicitly or implicitly discuss the fiduciary status and liability of

FBA, the trial court may, wisely, be waiting for our decision before

ruling on FBA’s motion for summary judgment. An obvious possi-

bility is to consolidate this remanded action with the FBA action.

88a

related to Plan termination which we could reverse.

FBA’s request actually asks us to become a fact-finder

ab initio, a role which does not properly rest with this

Court. Booker v. School Dist. No. 1, 585 F.2d 347, 353

(8th Cir.1978) (“function of the appellate court is not to

make an initial decision [on factual issues] but simply

to review the action of the trial court.”), cert. denied, 443

U.S. 915, 99 S.Ct. 3106, 61 L.Ed.2d 878 (1979).

Moreover, arguments by FBA that it should initiate

proceedings agaainst PBGC for ancillary relief under the

insurance guaranty provisions of ERISA are not relevant

to the issue of whether TACA, ALPA, or Huttinger had

any fiudciary duties under the Plan. An August 10, 1988

letter from the PBGC to the president of FBA stated that

the notification given to the pilots was insufficient, and

that the Plan was an ongoing plan until properly ter-

minated. According to the PBGC letter, TACA is re-

quired to meet the minimum funding standards under

§ 302 of ERISA and § 412 of the Internal Revenue Code

as long as the Plan is ongoing. Thus, while the pilots

may ultimately choose to seek relief from the PBGC, FBA

cannot force it to take this approach.

In sum, when summary judgment was granted on the

ERISA claims, the record contained disputed issues of

material fact regarding the fiduciar-- status of the defend-

ants with respect to the wrongs alleged in the complaint.

We remand to the trial court for a determination not in-

consistent with this opinion.

IV. RICO CLAIMS

In their amended complaint, pilots sought treble dam-

ages from TACA, ALPA and Huttinger under two sub-

sections of RICO." We must determine whether TACA,

* 18 U.S.C. § 1962. Prohibited Activities:

(b) It shall be unlawful for any person through a pattern of

racketeering activity or through collection of an unlawful debt

ALPA, and Huttinger showed there were no genuine is-

sues of material fact concerning the existence of (i) a

RICO person, (ii) predicate acts of racketeering activity,

(iii) a pattern of racketeering activity, and (iv) an

enterprise." The absence of a fact issue regarding any

one of these elements is sufficient to grant summary

judgment provided the legal analysis also favors the

movants.

The trial judge granted summary judgment against the

pilots. In brief, he found that if any predicate acts oc-

curred, they took place before the alleged RICO enterprise

came into being. Additionally, none of the alleged predi-

cate acts were found sufficient for the RICO claim.” The

trial court did find that a “pattern” of racketeering ac-

tivities was alleged,™ but held that there was no enterprise

to acquire or maintain, directly or indirectly, any interest in

or control of any enterprise which is engaged in, or the activi-

ties of which affect, interstate or foreign commerce.

ciated 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 un-

lawful debt.

61 Delta Truck & Tractor, Inc. v. J... Case Co., 855 F.2d 241, 242

(5th Cir.1988), cert. denied, ——- U.S. ——, 109 S.Ct. 1531, 103

L.Ed.2d 836 (1989) (“Reduced to its three essentials, a civil RICO

claim must involve: (1) a person who engages in (2) a pattern of

racketeering activity (3) connected to the acquisition, establishment,

conduct, or control of an enterprise.”); see also Gray v. Cauble,

849 F.2d 946, 949 n. 7 (5th Cir.1988) (test for § 1962(c)); Moss v.

Morgan Stanley, Inc., 719 F.2d 5, 17 (2d Cir.1983), cert. denied,

465 U.S. 1025, 104 S.Ct. 1280, 79 L.Ed.2d 684 (1984) (test for

§ 1962(a)-(c)).

®2 For the specifics as to the trial court’s disposition of each of

the alleged predicate acts, see infra Part IV. B.

63In making this ruling, the trial court was constrained by

R.A.G.S. Courture, Inc. v. Hyatt, 774 F.2d 1350 (5th Cir.1985),

although it made an effort to show why no pattern should be found

in this circumstance.

40a

because plaintiffs failed to allege the appropriate “con-

tinuity” under either of its enterprise theories.

Our review of a grant summary judgment is de novo.

The standards for granting or denying summary judg-

ment are well known.

The party seeking summary judgment bears the

exacting burden of demonstrating that there is no

actual dispute as to any material fact in the case... .

In assessing whether the movant has met this bur-

den, the courts should view the evidence introduced

and all factual inferences from that evidence in the

light most favorable to the party opposing the motion.

. All reasonable doubts about the facts should be

resolved in favor of the non-moving litigant.... A

court must not decide any factual issues it finds in

the record, but if such are present, the court must

deny the motion and proceed to trial. ... If reason-

able minds might differ on the inference arising

from undisputed facts, then the court should deny

summary judgment.”

Appropriate summary judgment evidence consists of

“the pleadings, depositions, answers to interrogatories,

and admissions on file, together with the affidavits, if

any.” F.R.Civ.P. 56(c). The affidavits must be made on

“personal knowledge, shall set forth such facts as would

be admissible in evidence, and shall show affirmatively

that the affiant is competent to testify to the matters

stated therein.” F.R.Civ.P. 56(e). Finally, once the mov-

ant has made and supported its motion as provided in this

*4 Impossible Electronics Techniques, Inc. v. Wackenhut Protective

Systems, Inc., 669 F.2d 1026, 1030 (5th Cir. Unit B 1982) (“In

reviewing a decision granting or denying summary judgment, this

court applies the same ‘egal standards as those that control the

district court in determining whether summary judgment is appro-

priate.”) (Citations omitted).

% Jd. at 1081 (citations omitted).

4la

rule, the “adverse party may not rest upon the mere alle-

gations or denials of the adverse party’s pleadings, but

the adverse party’s response, by affidavits or as otherwise

provided in this rule, must set forth specific facts showing

that there is a genuine issue for trial.” Jd.

A. The RICO Persons

The Fifth Circuit recently clarified the definition of the

RICO “person”—the defendant—in Delta Truck & Trac-

If we are to restrict RICO to the type of conduct

Congress intended to proscribe, the RICO person

must be either one that poses or has posed a continu-

ous threat of engaging in acts of racketeering... .

The continuous threat requirement may not be satis-

fied if no more is pled than that the person has

engaged in a limited number of predicate racketeer-

ing acts.

We are faced here with three RICO defendants and two

theories of the enterprise ™ which configure them in dif-

ferent ways.

1. Association-in-fact Persons

Under pilots’ “association-in-fact” enterprise theory,

Huttinger, ALPA and TACA formed or acted as an en-

terprise, whose alleged purpose was to move the TACA

pilot base, end ALPA’s representation of the TACA

pilots, ensure Huttinger’s retirement benefits and ulti-

mately deprive the pilots of their rights under the col-

lective bargaining agreement. Under this enterprise

theory all three could be RICO defendants. According to

pilots’ allegations and affidavit evidence, those goals have

*° 855 F.2d 241, 242 (5th Cir.1988), cert. denied, —— U.S. ——,

109 S.Ct. 1531, 103 L.Ed.2d 836 (1989).

*T Pilots’ two enterprise theories are discussed in detail, infra,

Part IV.D.

42a

been accomplished, so the enterprise no longer exists.**

There are no RICO defendants under this theory.

2. ALPA-as-Enterprise Persons

The pilots’ other enterprise theory regards ALPA as a

lawful enterprise which was the vehicle for racketeering

activities perpetrated by TACA and Huttinger. Under

this theory, ALPA cannot be a RICO person—or de-

fendant—for the § 1962(c) violation because in such a

situation, “the ‘person’ and the ‘enterprise’ must be dis-

tinct.” ® The rationale for this distinction comes from

the language of the statute which deals with a “person

employed by or associated with any enterprise.” 18

U.S.C. § 1962(c).% This language shows that Congress

intended for the RICO person and the enterprise to be

separate entities.

It would be incongruous here to find that while ALPA,

as the enterprise, cannot be a RICO person, it can be

held vicariously liable for the acts of Huttinger. If this

were the rule, all legal enterprises could be found liable

under RICO if their employees or agents were involved

in perpetrating predicate acts through or against them.

This is contrary to the rule Congress meant to impose as

evidenced by the language of the statute. ALPA is thus

not appropriately a defendant under this legal enterprise

theory for purposes of the § 1962(c) violation, either as

a RICO person or vicariously.

68 This is discussed in detail in Part IV.D., infra. 9

69 Bishop v. Corbitt Marine Ways, Inc., 802 F.2d 122, 123 (5th

Cir.1986) ; see also Atkinson v. Anadarko Bank and Trust Co., 808

F.2d 438, 441 (5th Cir.), cert. denied, 483 U.S. 1032, 107 S.Ct.

3276, 97 L.Ed.2d 780 (1987).

7 The Fifth Circuit has adopted the rationale of the Seventh

Circuit in this regard. See Haroco v. American National Bank &

Trust Co. of Chicago, 747 F.2d 384, 400 (7th Cir.1984), aff’d 473

U.S. 606, 105 S.Ct. 3291, 87 L.Ed.2d 437 (1985).

ALPA can be both the enterprise and a RICO defend-

ant for the § 1962(b) violation. In contrast to the lan-

guage of subsection (c) which “requires a relationship

between the ‘person’ and the ‘enterprise,’ subsection[. . .]

(b) require[s] only the use of an ‘enterprise’ by a ‘per-

son.’” ** Thus the RICO person and the enterprise need

not be distinct for a person to be held liable under sub-

section (b). A finding of vicarious liability on the part of

an enterprise which derived benefit from its representa-

tive’s wrongful acts is also consistent with this view.”

The continuing threat requirement must still be met.

For purposes of the alleged subsection (c) violation, only

TACA and Huttinger could be defendants. Pilots have

not alleged that TACA constitutes or has constituted a

continuing threat—it is not a RICO person. A fact issue

exists as to whether Huttinger poses a continuing threat

resulting from his receipt of retirement benefits. This

turns on the fact issue which we find to exist, as to

whether the receipt of these benefits constitutes mail

fraud.

For purposes of the subsection (b) violation, pilots

have alleged that ALPA poses a threat of continuing

harm to other victims. As an example, they cite a suit

against ALPA by Continental Airlines pilots making

much the same allegations as the TACA pilots: ALPA

sold them out to protect itself from prosecution for the

acts of sabotage it directed. This allegation is unrefuted

by any summary judgment evidence. Thus the allegation

that ALPA poses a continuing threat of engaging in

racketeering activities remains to be resolved. Likewise

there is a fact issue as to whether Huttinger’s receipt

of retirement benefits is a continuation of racketeering

71 Liquid Air Corp. v. Rogers, 834 F.2d 1297, 1307 (7th Cir.1987),

cert. denied, US. , 109 S.Ct. 3241, 106 L.Ed.2d 588 (1989).

7 Id,

44a

activity. Again, TACA is not a RICO person for pur-

poses of this violation.”

B. Racketeering Activity ™

1. The Extortion Claim

As one of the predicate acts of racketeering activity,

the pilots claimed thta TACA, ALPA and Huttinger com-

mitted extortion in violation of Louisiana state law” and

18 U.S.C. § 1951.7* In support of these claims, the pilots

alleged that Padgett, at the direction of Huttinger and

ALPA, committed acts of sabotage against TACA air-

craft and equipment to coerce concessions during negotia-

tion of the collective bargaining agreement.

78 Although we have found that TACA is not appropriately a

RICO person—or defendant—for any of the alleged RICO violations,

pilots’ allegations of TACA’s past wrongdoing will frequently be

discussed in the remainder of this season. We will explain the effect

of TACA’s status where appropriate.

74 Racketeering activity is defined in relevant part as:

(A) state law felonies; (B) acts indictable under several sections

of 18 U.S.C. relating to, e.g., bribery (§ 201), embezzlement from

pension and welfare funds (§ 664), mail fraud (§ 1341), wire fraud

(§ 1843); (C) acts indictable under sections of 29 U.S.C. including

violations of restrictions on payments and loans to labor organiza-

tions (§ 186) and embezzlement from union funds (§ 501(c)); and

(D) offenses involving fraud under Title 11, in the sale of securities,

ete. 18 U.S.C. § 1961(1).

7 The particular provision of Louisiana state law that was vio-

lated is not specified in the RICO case statement or the trial court’s

opinion.

7618 U.S.C. § 1951 Interference with commerce by threats or vio-

lence. “(a) Whoever in any way or degree obstructs, delays, or

affects commerce or the movement of any article or commodity in

commerce, by robbery or extortion or attempts or conspires so to

do, or commits or threatens physical violence to any person or prop-

erty in furtherance of a plan or purpose to do anything in violation

of this section shall be fined not more than $10,000 or imprisoned

not more than twenty years, or both.”

- i oy Pee, 20 g

Dan Wi de BAA isla. al vie olds Lil BME tea Rabel wees

BN Lien

45a

We agree with the trial court that these acts may not

properly be considered predicate acts. The pilots did not

allege that these extortionate acts were committed in the

establishment or conduct of the affairs of an enterprise.

If anything, they could only have been hostile to the goals

of an alleged enterprise of which TACA and ALPA were

both members.” Finally, the acts of sabotage are not

actionable because the pilots did not allege or show that

they sustained any injury as a result.”* In fact, the sabo-

tage, under the theory advanced by pilots, was intended

to provide the pilots with an advantage in the form of

bargaining concessions. It was not intended to deprive

them of any rights.

2. The 29 U.S.C. § 186 Violation

The pilots alleged that ALPA made illegal payments

to a labor official in violation of 29 U.S.C. § 186, which

is section 302 of the LMRA.” In support of their claim,

77 This claim could not properly be raised under the ALPA-as-

Enterprise theory in connection with the § 1962(c) claim since

ALPA is not properly a defendant for that claim. See supra notes

68-70 and accompanying text.

7 R.A.G.S. Couture, Inc. v. Hyatt, 774 F.2d 1350, 1354 (5th Cir.

1985) (“Any injury to business or property caused by a violation o:

18 U.S.C. §1962(c) is sufficient.) (Emphasis added). The Fifth

Circuit derived this rule from Sedima, S.P.R.L. v. Imrex Co., Inc.,

473 U.S. 479, 495, 105 S.Ct. 3275, 3284, 87 L.Ed.2d 346, 358 (1985),

which held,

If the defendant engages in a pattern of racketeering activity

in a manner forbidden by these provisions, and the racketeering

activities injure the plaintiff in his business or property, the

plaintiff has a claim under § 1964(c).

79 29 U.S.C. § 186 provides:

(a) It shall be unlawful for any employer or association of

employers or any person who acts as a labor relations expert,

adviser, or consultant to an employer or who acts in the interest

of an employer to pay, lend, or deliver, or agree to pay, lend,

or deliver, any money or other thing of value—

(1) to any representative of any of his employees who are

employed in an industry affecting commerce; or

46a

they provide the following facts. Huttinger suffered from

a disability which prevented him from flying. The result

of this should have been his removal from active status in

late 1984, five years after he became disabled. Once

removed from active status, he would not have been en-

titled to sick leave, to be on the priority list, or to

represent ALPA in its negotiations with TACA. Yet

Huttinger stayed on the seniority list, received sick leave

benefits, represented ALPA in its negotiations with

TACA, and received a $26,000 severance payment.

There is no factual issue to be resolved regarding these

allegations for two reasons. First, ALPA has produced

affidavits and documents that we find establish as a mat-

ter of law that under its constitution and by-laws, Hut-

tinger was properly on the “active” status list and there-

fore entitled to all the privileges of ALPA membership

including the right to vote and hold office. Since the

pilots presented no evidence to rebut this, ALPA has

shown the absence of a material fact issue in this re-

(2) to any labor organization, or any officer or employee

thereof, which represents, seeks to represent, or would admit

to membership, any of the employees of such employer who are

employed in an industry affecting commerce; or

(3) to any employee or group or committee of employees of

such employer employed in an industry affecting commerce

in excess of their normal compensation for the purpose of

causing such employee or group or committee directly or in-

directly to influence any other employees in the exercise of the

right to organize and bargain collectively through representa-

tives of their own choosing; or

(4) to any officer or employee of a labor organization en-

gaged in an industry affecting commerce with intent to influence

him in respect to any of his actions, decisions, or duties as a

representative of employees or as such officer or employee of

such labor organization.

(b)(1) It shall be unlawful for any person to request, de-

mand, receive, or accept, or agree to accept, any payment, loan,

or delivery of any money or other

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