# Petition for Writ of Certiorari — Air Line Pilots Ass'n v. Landry > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_1655%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1990 - **Citation:** 498 U.S. 895 ## Text 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 a 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) ii 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. oe 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) ii oo Fy, FF SO HO NW NW K A 10 10 16 17 iv 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 21 24 28 v 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. vi 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) . 13 17 20 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 20 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. a Ruby v. TACA Int'l Airlines, S.A., 439 F.2d 1359 DR yy ————————————7~ San Diego Bldg. Trades Council v. Garmon, 359 a Scott v. Gulf Oil Corp., 754 F.2d 1499 (9th Cir. ST conciestenstnshcctnsiccentnenipenantinateaiiniiaeisennainetganiatants = Sedima, SPRL. v. Imrez Co., 473 US. 479 a 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 Ee Switchmens Union V. National Mediation Board, I yyyy————————————— Texas Industries, Inc. Vv. Radcliff Materials, 451 CS 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 15 -_-— ————— ix 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 x 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 Be Ne TE picnics cieesivcnnchonnstbhalaininstsncisinidisnoichicees Be ee FI vin saccnnndan ¥ La 5 yee (g Hebe r' of e'9 tis i eo oe _ , le tes ~ ee ep eee rat ees APPENDICES la APPENDIX A UNITED STATES COURT OF APPEALS FIFTH CIRCUIT No. 88-3363 FRANK LANDRY, et al., Plaintiffs-Appellants, V. 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 2a 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). 8a 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 4a 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 5a 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. 6a 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, 7a 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- 8a 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). 9a 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 .... * > * > * 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 (c) an additional $2,000 per year for each pilot on the senior- ity list in excess of fifty (50) pilots and (d) all obligations coming due under clauses (a), (b), and (c) above will be paid by 12 payments 1/12 each such payments 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 ; (c) provide guidelines for the Plan Administrator, as required 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: * * * * * * (c) Prepare and arrange for delivery to Participants such 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 facts as [FBA] may require.” © However, any fiduciary 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] (C) by diversifying the irvestment of the plan so as to 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. ————— Se 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. (c) It shall be unlawful for any person employed by or asso- 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- tor, Inc. v. JI. Case Co.: © 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 thing of value prohibited by subsection (a) of this section. 47a spect. Second, the LMRA makes it illegal for an em- ployer to pay or lend money to a union that represents its employees and for the union to receive or demand such payments. However, the LMRA excludes from cov- erage RLA employers and employees.® Airlines and air- line pilots come under the RLA.* In response to the seemingly conclusory statutory dis- position of this issue, pilots raise a subtle argument. Their theory is that TACA, ALPA, and Huttinger con- tractually converted themselves from RLA to LMRA cov- erage through the agreement by which TACA was re- located to El Salvador and the pilots were terminated. The district court rejected this argument, finding that TACA was not relieved of RLA obligations until Sep- tember 1, 1985 which was after any enterprise that may have existed was dissolved. We agree that TACA was an RLA employer when the alleged LMRA violations oc- curred. Although TACA is not a RICO defendant, we must reach this issue to determine the status of Hut- tinger and ALPA, who were likewise subject to the RLA. Thus no predicate racketeering act is stated. 8. The Mail and Wire Fraud Claims The pilots have described four acts which they allege constituted mail fraud and therefore predicate acts for RICO. (1) On July 3, 1985 Huttinger wrote the pilots to say negotiations between ALPA and TACA had broken down. He said that regardless of the outcome of the ne- gotiations, TACA would have to contribute to the pen- sion plan. TACA has not continued its contributions to the plan. (2) On July 24, 1985 Huttinger sent a letter and telegram to the pilots saying that TACA and ALPA had reached an agreement “subject to ratification.” Pilots were not given the chance to ratify the agreement. (‘3) 8029 U.S.C. §§ 142(3), 152(2), (3); see also United States v. Davidoff, 359 F.Supp. 545, 547-48 (E.D.N.Y.1973). 81 45 U.S.C. § 182. 48a On August 3, 1985 TACA sent a letter to the pilots in- forming them that ALPA had agreed to the relocation of the pilot base to El Salvador. The pilots were given twelve days to decide to leave TACA and take severance pay or to move themselves and their families to El Sal- vador. This communication did not inform the pilots that their retirement fund would be terminated or that they needed to take certain actions to protect their eligibility to receive benefits. Pilots later learned that they had lost their right to receive benefits. (4) The pilots allege that illegal payments of severance pay and retirement benefits were made and are being made by mail to Hut- tinger in furtherance of the scheme to defraud the pilots. The trial court disregarded the final allegation (No. (4)) on the grounds that it had not been pleaded with sufficient particularity to withstand F.R.Civ.P. 9(b).” It apparently found that the other allegations of mail fraud were insufficient, based upon its general finding that the alleged acts predated any possible enterprise. We disagree with the trial court’s characterization of the timing. These alleged acts of mail and wire fraud occurred during the negotiation process. ALPA was con- tinuously in existence throughout this time so any acts that occurred or were alleged took place during the ex- istence of the “ALPA-as-enterprise” enterprise. The crime of mail fraud is committed when the mails are used as part of a scheme or artifice to defraud.* The ®2 This is discussed infra; see text accompanying notes 92-93. 8318 U.S.C. § 1341. Frauds and Swindles. Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, .. . for the purpose of executing such scheme or artifice or attempting to do so, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or takes elements of mail fraud as a predicate offense for civil RICO purposes are: (1) A scheme or artifice to defraud or to obtain money or property by means of false or fraudulent pretenses, representation or promises. (2) Interstate or intrastate use of the mails for the purpose of furthering or executing the scheme or artifice to defraud. (3) The use of the mails by the defendant con- nected with the scheme artifice [sic] to defraud. (4) Actual injury to the business or property of the plaintiff.” The mail fraud statute proscribes two different of- fenses. The first is acting pursuant to a scheme or arti- fice to defraud. The second is acting pursuant to a scheme or artifice for the purpose of obtaining money or property by means of false or fraudulent pretenses, rep- resentations or promises.” Plaintiffs have alleged both types of schemes in this case. or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined not more than $1,000 or imprisoned not more than five years, or both. *% 1 D. McCormack, Racketeer Influenced Corrupt Organizations 4-46 - 4-47 (Knowles Law Book Publishing, Inc. 1989). 85 Jd. at 4-47, citing, United States v. Margiotta, 688 F.2d 108, 121 (2d Cir.1982), cert. denied, 461 U.S. 913, 103 S.Ct. 1891, 77 L.Ed.2d 282 (1983) (“The prohibition against schemes or artifices to de- fraud is properly interpreted to be independent of the clause ‘for obtaining money or property.’”) (Citations omitted); see also United States v. Townley, 665 F.2d 579, 585 (5th Cir.), cert. denied, 456 U.S. 1010, 102 S.Ct. 2305, 73 L.Ed.2d 1307 (1982); McLendon v. Continental Group, Inc., 602 F.Supp. 1492, 1507 (D.N. J.1985). - 50a First, they allege that TACA and Huttinger operating through and with the enterprise ALPA, schemed to achieve the relocation of TACA’s pilot base to El Salvador.*® Each of the participants had individual motivations for wishing the achievement of this end, but they all required the success of this common goal. In order to achieve their end, TACA, ALPA and Huttinger participated in a scheme to defraud the pilots of their jobs and pension benefits.’ Reading the facts in the light most favorable to the pilots, the following steps could have occurred as part of this plan to defraud. The pilots were sent letters telling them that the plan would not be touched and was not a subject of the negotiations between TACA and ALPA. They were told that the agreement ultimately reached was “subject to ratification.” They were not told that the agreement which was reached, and which ac- tually did not require ratification by the membership, terminated their pension benefits at the time they had to *6 The pilots also alleged that the association-in-fact enterprise of ALPA, TACA, and Huttinger, which we find did not exist, had this goal. 87 The pilots have sufficiently alleged an intent to defraud, but even in the absence of such a showing, the intent to defraud is im- puted to civil RICO defendants who act with reckless indifference to the truth or falsity of their representations. United States v. Frick, 58° F.2d 531, 536 (5th Cir.), cert. denied, 441 U.S. 913, 99 S.Ct. 2013, 60 L.Ed.2d 385 (1979); see also United States v. Love, 535 F.2d 1152, 1158 (9th Cir.), cert. denied, 429 U.S. 847, 97 S.Ct. 130, 50 L.Ed.2d 119 (1976) ; United States v. Beecroft, 608 F.2d 753, 757 (9th Cir.1979). If the misrepresentations, omissions and false promises alleged here were not intentional, then they were certainly reckless. The RICO defendants correctly state that under the mail fraud statute, the determination of what constitutes fraud is left largely to outside sources of law. Parr v. United States, 363 U.S. 370, 389, 80 S.Ct. 1171, 1182, 4 L.Ed.2d 1277, 1289 (1960). They are incorrect, however, in their position that such fraud must be found in the pilots’ DFR, ERISA, LMRA, or conversion claims. Clearly the state common law of fraud may provide a source of sub- stantive law and the allegations are sufficient to support such a claim having been made. 5la decide between quitting (for severance pay) and relo- cating to El Salvador. These misrepresentations, omissions ** and false prom- ises may have initially lulled the pilots into inaction. Based on these communications, they thought that Hut- tinger and ALPA were protecting their interests and they had no reason to question the system. Pilots allege that this correspondence ultimately had the effect of de- frauding them of their jobs and pension benefits. TACA was able to relocate; ALPA was not prosecuted and was able to drop its representation of the TACA pilots; Hut- tinger received severance and retirement benefits. Only the pilots lost out. The intentional misrepresentations and omissions could have created a valuable undue ad- vantage for TACA, ALPA and Huttinger® and thus constituted a scheme or artifice to defraud.” Additionally, the defendants allegedly sought to.obtain money or property by means of false or fraudulent pre- tenses, representation or promises. These are seen in their asserted motivations for their common goal of ef- fecting the relocation and the benefits each received as a result. ALPA would save money by ridding itself of a small, yet costly, local union. It would also avoid the expense of defending against civil cases and criminal charges based on its alleged sabotage of TACA’s planes. Huttinger would gain his severance pay and pension benefits.” 88 See United States v. Beecroft, 608 F.2d 753, 757 (9th Cir. 1979) (both communication of half truths and concealment of ma- terial facts are actionable under the mail fraud statute). *® Although we have referred to TACA’s goals and the benefits it received, they are not necessary. The fact issues with regard to ALPA and Huttinger are sufficient to state the claim. United States v. Rasheed, 663 F.2d 843, 849 (9th Cir.1981), cert. denied, 454 U.S. 1157, 102 S.Ct. 1031, 71 L.Ed.2d 315 (1982). *1 Because he retired at the appropriate time, Huttinger qualified for pension benefits. However, the pension plan was underfunded 52a Only ALPA has controverted the goals, outlined above, which pilots have asserted. In an unchallenged affidavit ALPA has stated that the cost of representing the TACA pilots was not a factor in its negotiating strategy or pos- ture. We point out that ALPA has not said exactly what it was trying to accomplish on behalf of the pilots. ALPA also has not denied that it was threatened with criminal prosecution and civil damage suits. In light of the re- maining undisputed facts and the inferences therefrom, we find that mail fraud has been sufficiently alleged to create genuine factual issues regarding predicate acts of racketeering activity. We also disagree with the trial court’s disposition of the allegations of mail fraud in connection with Hut- tinger’s receipt of pension benefits. F.R.Civ.P. 9(b) re- quires that “[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.” However, Rule 9(b) is read in connection with F.R.Civ.P. 8 which requires only a “short and plain statement of the claim showing that the pleader is entitled to relief.” *? The pilots have certainly and could not afford to pay full benefits to all the pilots eligible for retirement under the plan. Thus, one could infer from the undis- puted facts that once Huttinger began receiving payment under the plan, or realized he could qualify for benefits and preempt any other pilots from doing so, he had an incentive to provoke the re- location, thereby denying the other pilots the opportunity to prove their eligibility. Even before he began to receive retirement payments, Huttinger had an incentive to keep the pilots in ignorance of the effect a termination would have and of their rights under the plan. As chairman of the pension committee, he was in the perfect spot to have all the information needed to protect his interest and at the _same time to know what information he should not disseminate in order to protect that interest against diminution by the claims of all the eligible pilots. 92 F.R.Civ.P. 8(a)(2); see Ross v. A.H. Robins Co., 607 F.2d 545, 557 n. 20 (2d Cir.1979), cert. denied, 446 U.S. 946, 100 S.Ct. 2175, 64 L.Ed.2d 802 (1980) (“The requirement of particularity 4 y Pc a ¢ ¥ he & bi Cea hacies fais aCe ee 58a pleaded sufficient facts to put the defendants on notice of their claim with regard to Huttinger’s receipt of pen- sion benefits. As early as the Original Complaint,® the pilots alleged that Huttinger had breached kis duty of fair representation, a fiduciary duty, by agreeing to the structuring of the termination agreement in such a way that Huttinger’s pension would be funded, but no one else’s. Additionally, in the amended complaint, the pilots alleged that Huttinger applied for and is receiving pen- sion benefits and that this was in connection with the scheme to defraud the pilots. Finally, in the RICO Case Statement, the pilots spent a great deal of time detailing their factual allegations regarding Huttinger’s receipt of pension funds. They alleged, in pertinent part, that Huttinger and ALPA bar- gained away TACA’s obligation to continue funding the pension plan in return for TACA’s agreement not to bring civil or criminal charges against ALPA for the acts of espionage described, supra. Huttinger was aware that this left the plan underfunded and that not all pilots would be able to receive their pension benefits. The pilots claimed that Huttinger intentionally failed to inform them of their right to apply for early retirement or of the fact that if they did not apply for benefits prior to the termination of funding, they would not be entitled to receive any benefits. Thus, the pilots argued that, in manifest abuse of his fiduciary position, Huttinger as- does not abrogate Rule 8, and it should be harmonized with the general directives ... of Rule 8 that the pleading should contain a ‘short and plain’ statement of the claim or defense and with each averment should be ‘simple, concise and direct.’ Rule 9(b) does not require nor make legitimate the pleading of detaile’ evidentiary matter.”) (Citations omitted). %8 The claims alleged in the original complaint were dismissed before the RICO claim was addressed by the trial court. The factual allegations contained in the Original Complaint are relevant to the RICO claim, however, because the Amended Complaint incorporates them all by reference. 54a sured himself of his own benefits by keeping those he represented in the dark. We cannot conceive of how the defendants failed to be put on notice of the claim with the amount of detail that was provided. We find that the pilots have alleged with particularity the defendants’ acts which they contend amount to fraud. 4. Violation of 18 U.S.C. § 664 * Pilots allege that Huttinger’s receipt of retirement benefits is a violation of 18 U.S.C. § 664. The trial court did not address this issue, finding that pilots had not pleaded the issue in its Original or Amended Complaints. We disagree, finding the allegation at Paragraph 39 of the Amended Complaint where pilots said: “On informa- tion and belief, ... TACA and Charles J. Huttinger con- verted money and funds of the TACA pilot’s employee benefit plan for their own uses.” Additionally, the trial court found that pilots had adduced no evidence on this claim since the only relevant affidavit was not based on personal knowledge. We deal with this finding below. Pilots have not directly shown, by affidavit or other- wise, what acts constituted conversion, who committed these acts, when the acts were done, or by whom. How- ever, it is clear, in connection with pilots’ other factual allegations, that they are referring to Huttinger’s re- ceipt of retirement benefits. % See Unimobil 84, Inc. v. Spurney, 797 F.2d 214, 217 (5th Cir. 1986). 918 U.S.C. § 664 Theft or embezzlement from employee benefit plan: Any person who embezzles, steals, or unlawfully and willfully abstracts or converts to his own use or to the use of another, any of the moneys, funds, securities, premiums, credits, prop- erty, or other assets of any employee welfare benefit plan or employee pension benefit plan, or of any fund connected there- with, shall be fined not more than $10,000, or imprisoned not more than five years, or both. 55a The Ninth Circuit dealt extensively with § 664 liabil- ity in United States v. Andreen, 628 F.2d 1236 (9th Cir. 1980). The terms in the statute are to be given their traditional meanings. Thus, “[t]he concept of unlawful conversion encompasses the use of property, placed in one’s custody for a limited purpose, in an unauthorized manner or to an unauthorized extent.” * Embezzlement “encompasses the fraudulent appropriation of the prop- erty of another by one in lawful possession thereof.” The statute encompasses more than traditional embezzle- ment and unlawful conversion, however, and imposes lia- bility for intentional breaches of special fiduciary duties imposed by other statutes or the instruments governing the trust.* The RICO defendants argue that pilots have not stated a predicate act here because they have shown neither scienter,” nor that Huttinger’s receipt of pension bene- fits was “substantially inconsistent with the fiduciary purposes and objectives of the . . . pension plan, as set forth by statutes, bylaws, charters, or trust documents which govern uses of the funds in question.” '” We state once again that pilots’ burden in response to the motions for summary judgment was not to prove its case, but to show the existence of genuine and material fact issues regarding its essential elements. The RICO defendants have not produced any evidence negating the scienter element. They have not demonstrated that Hut- tinger did not act willfuly, that is “with a fraudulent % Jd. at 1241, citing, Morissette v. United States, 342 U.S. 246, 272, 72 S.Ct. 240, 254, 96 L.Ed. 288 (1952). 7 Id., citing, United States v. Dupee, 569 F.2d 1061, 1064 (9th Cir.1978). 98 Jd. %? Jd. Scienter is an essential element of a § 664 violation. 100 Brief of ALPA and Huttinger at 36-37, citing, United States v. Andreen, 628 F.2d 1236, 1241 (9th Cir.1980). ~ 56a intent or a bad purpose or an evil motive.” Since the movants have not shown the absence of any disputed fact issues in this regard, they have failed to meet their burden. Thus the allegations in the pilots’ Complaints stand and remain for resolution on remand. The fact that pilots have made allegations which the RICO defendants refute in brief but not with facts, by way of affidavit evidence or otherwise, shows that factual issues remain to be resolved. The only way movants could prevail on this aspect of their summary judgment motion is by a legal finding that Huttinger did not breach any fiduciary duties under ERISA or 29 U.S.C. § 501.2 As we found above that Huttinger clearly did breach fiduciary duties, the factual issues remain to be resolved. C. Pattern The United States Supreme Court has recently revised and “clarified” the definition of pattern in the RICO statute. In H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. ——, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989), the Supreme Court rejected the Eighth Circuit’s “multi- ple scheme” requirement and also disagreed with “those courts that have suggested that a pattern is established 101 Jd. 102 Pilots allege that Huttinger breached the fiduciary duties im- posed by ERISA and those created by 29 U.S.C. § 501. The ERISA claims are dealt with, supra. 29 U.S.C. § 501. Fiduciary responsi- bility of officers of labor organizations: (a) The officers, agents, shop stewards, and other representa- tives of a labor organization occupy positions of trust in rela- tion to such organization and its members as a group. It is, therefore, the duty of each such person .. . to hold its money and property solely for the benefit of the organization and its members... . 103 See supra, ERISA portion of opinion. 57a merely by proving two predicate acts.” ** The Fifth Cir- cuit has explicitly recognized that H.J. Inc. narrowed the definition of pattern from that previously used in this circuit. Thus prior Fifth Circuit precedent, and those cases cited by the parties, are of little assistance to us. In H.J. Inc., the Supreme Court found that. RICO’s legislative history reveals Congress’ intent that to prove a pattern of racketeering activity a plaintiff or prosecutor must show that the racketeer- ing predicates are related, and that they amount to or pose a threat of continued criminal activity.’ The reiationship element has been defined by borrowing from a related statute. “[C]riminal conduct forms a pattern if it embraces criminal acts that have the same or similar purposes, results, participants, victims, or methods of commission or otherwise are interrelated by distinguishing characteristics and are not _ isolated events.” 7" The Supreme Court found the definition of continuity more difficult, and opted for a flexible ap- proach that they believe derives from a common every- day understanding of RICO. What a plaintiff or prosecutor must prove is conti- nuity of racketeering activity, or its threat, sim- pliciter. ... “Continuity” is both a closed- and open- 104 H.J., Inc., 492 U.S. at ——, 109 S.Ct. at 2899, 106 L.Ed.2d at 206. 10 Smith v. Cooper/T. Smith Corp., 886 F.2d 755, 756 (5th Cir. 1989). The prior Fifth Circuit pattern requirement was described in R.A.G.S. Couture, Inc. v. Hyatt, 774 F.2d 1350, 1855 (5th Cir.1985) (holding that two “related” acts of mail fraud constitute a pattern). 106 HJ. Inc., 492 U.S. at ——, 109 S.Ct. at 2900, 106 L.Ed.2d at 208. 107 Jd. The definition of relationship thus adopted is the pattern definition from Title X of the Organized Crime Control Act (OCCA), which is the Dangerous Special Offender Sentencing Act, 18 U.S.C. § 3575, et seg. RICO forms Title IX of the OCCA. 58a ended concept, referring either to a closed period of repeated conduct, or to past conduct that by its na- ture projects into the future with a threat of repe- tition. ... It is, in either case, centrally a temporal concept—and particularly so in the RICO context, where what must be continuous, RICO’s predicate acts or offenses, and the relationship these predicates must bear to one another, are distinct require ments.’ The relationship element is easily satisfied here by pilots’ allegations, First, all of the predicate acts were aimed at achieving a single goal—relocation of the pilots’ base to El Salvador. Only through the accomplish- ment of this goal could all of the RICO defendants’ sub- sidiary goals be accomplished. Second, we find the par- ticipants were the same: ALPA and Huttinger. Third, the victims were the same: the pilots. Finally, the events are in no way isolated, but are related in the sense that they all occurred or commenced during or grew out of the process of negotiating TACA’s relocation program. The RICO defendants have put on some evidence that might negate the first element. For example, they have showed that ALPA’s actions were not motivated by a desire to rid itself of a small, costly union. They have not, however, rebutted the allegation that ALPA gave in to TACA to avoid prosecution for its sabotage activities. Likewise, they have tried to show that Huttinger’s re- 108 Jq., 492 U.S. at ——, 109 S.Ct. at 2901, 106 L.Ed.2d at 209. The Court went on to clarify how “continuity” may be proved. A party alleging a RICO violation may demonstrate continuity over a closed period by proving a series of related predicates extending over a substantial period of time. Prediate acts extending over a few weeks or months and threatening no fu- ture criminal conduct do not satisfy this requirement: Con- gress was concerned in RICO with long-term criminal conduct. Often a RICO action will be brought before continuity can be established in this way. In such cases, liability depends on whether the threat of continuity is demonstrated. pension benefits was proper from the standpoint They have not, however, removed factual dis- putes regarding the propriety of Huttinger’s activities or his goals. In sum, pilots have alleged relationship. The RICU defendants’ affidavits and submissions do not “show that there is no genuine issues as to any material fact” in this regard. F.R.Civ.P. 56(c). Thus, on remand, the trial court must determine whether the relationship ele- ment of the pattern requireinent is met. We find that the continuity element of the pattern re- quirement is disposed of by our prior discussion of the RICO person requirement. There we found the existence of factual issues regarding the threat of continued rac- keteering activity by these defendants/appellees. At least some of the racketeering acts that threaten tw continue are related under the test applied above and for the same reasons. D. Enterprise Pilots have developed two alternative theories of the enterprise. The above discussion has made reference to these separate claims where necessary, and they will be dealt with in detail here. 1. “Association-in-Fact” Enterprise An association-in-fact enterprise must also meet a con- tinuity requirement. Such an enterprise “(1) must have an existence separate and apart from the pattern of racketeering, (2) must be an ongoing organization and (3) its members must function as a continuing unit shown by a hierarchical or consensual decision making structure.” *” We find that the association-in-fact enter- 109 Delta Truck & Tractor, Inc. v. JJ. Case Co., 855 F.2d 241, 243 (5th Cir.1988), cert. denied, U.S. ——, 109 S.Ct. 1531, 103 L.Ed.2d 836 (1989), citing, Manaz v. McNamara, 842 F.2d 808, 811 (5th Cir.1988); Foval v. First Nat'l Bank of Commerce, 841 F.2d 60a prise, if it ever existed, was one that “briefly flournished and faded” and therefore fails to meet the requirement that it function as a continuing unit. We do not believe this to be inconsistent with our findings of fact issues regarding continuiy in the RICO person and the pattern requirements. There the threat was sufficient if it came from an indiviual. Here pilots were required to show that the enterprise as a whole functioned as a continuing unit. In a case like this, where the enterprise’s goals have been accomplished, and where those goals were achieved in a matter of months, through a discrete pat- tern of activity, there is no continuity. In addition, pilots have not alleged or shown the exist- ence of an enterprise separate and apart from the pat- tern of racketeering activity."° It appears that once the “Pilots’ Agreement” was reached, and the follow-up acts—such as obtaining the pilots’ severances and ter- minating ALPA representation—had occurred, the enter- prise ceased to exist. In reality, the association of ALPA and Huttinger had no alleged purpose other than to com- mit the predicate acts leading up to the relocation. 2. ALPA as Enterprise The pilots’ second enterprise theory sees ALPA as the legal enterprise which was a vehicle for racketeering ac- tivities by TACA and Huttinger.*" There is no question that ALPA itself satisfies § 1961(4)’s definition of enter- prise: “ ‘enterprise’ includes any individual, partnership, 126, 129-30 (5th Cir.1988) ; Montesano v. Seafirst Commercial Corp., 818 F.2d 423, 426-27 (5th Cir.1987); Atkinson v. Anadarko Bank & Trust Co., 808 F.2d 438, 440-41 (5th Cir.1987), cert. denied, 483 U.S. 1032, 107 S.Ct. 3276, 97 L.Ed.2d 780 (1987); Shaffer v. Wil- liams, 794 F.2d 1030, 1032 (5th Cir.1986). 110 See Ocean Energy Il v. Alexander & Alexander, Inc., 868 F.2d 740, 748-49 (5th Cir.1989), citing, Montesano v. Seafirst Commercial Corp., 818 F.2d 423, 427 (5th Cir.1987). 111 ALPA’s position as a defendant under this theory is dis- cussed, supra at Part IV.A.1. 6la corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” ALPA was continuously in existence throughout the period when the alleged predicate acts oc- curred. It remains in existence today. Thus this district court erred in not finding an enterprise under this theory. E. RICO Conclusion We have found that TACA is not an appropriate RICO defendant because pilots did not allege that it constitutes a continuing threat. ALPA is a RICO defendant only for purposes of the § 1962(b) violation; it cannot be both the enterprise and a defendant for purposes of the § 1962(c) claim. Huttinger is properly a RICO defend- ant as to all of pilots’ claims. With regard to the alleged predicate acts of racketeer- ing activity, we have affirmed the trial court in some regards and reversed in others. We agree with the trial court that the extortion ciaim wus not properly alleged nor supported by che record. The 29 U.S.C. § 186 claim cannot stand because RLA employers and employees, as a matter of law, are not subject to this provision of the LMRA. We reverse the trial court’s decision with re- spect to the mail and wire fraud claims. There are gen- uine issues of material fact. Finally, we find that the summary judgment movants have not met their burden of showing the absence of factual disputes regarding Huttinger’s alleged embezzlement or conversion. Thus pilots’ allegations remain to be resolved on remand. The Supreme Court’s recent decision in H.J., Inc. holds that in order to prove a pattern of racketeering activity, the RICO plaintiff must show both relationship and con- tinuity. We affirm the trial court’s holding that a pat- tern was properly alleg [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_1655%3A1. Public record. Not legal advice.