# Petition for Writ of Certiorari — Yellow Bus Lines, Inc. v. Drivers, Chauffeurs & Helpers Local Union 639

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1991
- **Citation:** 501 U.S. 1222

## Text

FILED

90-8 79 OC 3 1999

In The
Supreme Court Of The United States

October Term, 1990

YELLOW BUS LINES, INC.
Petitioner
Vv.

DRIVERS, CHAUFFEURS & HELPERS
Local Union 639, et. al.

Respondents

PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT.

Thomas G. Corcoran, Jr.
Counsel of Record

Henry M. Lloyd

Berliner, Corcoran, & Rowe
1101 17th Street N.W.
Washington, D.C. 20036
(202) 293-5555

G. Robert Blakey

Notre Dame Law School
Notre Dame, Indiana 46556
(219) 239-5717

Attorneys for Petitioner

QUESTIONS PRESENTED

Yellow Bus, Inc., was struck by its
union employees in a violent recognition
strike sponsored by Teamsters Local No.
639. The company sued the union for
damages to its business and property during
the strike and thereafter under RICO, 18

U.S.C. § 1961 et. seq.

This litigation raises four critically
important issues under 18 U.S.C. § 1962(c):

(1) May a striking union be the
"person" sued by a struck company and, at
the same time, the "enterprise" whose
"affairs" are "conducted" by a "pattern of
racketeering activity", "arson" and
"extortion"?

(2) Alternatively, may a striking
union be "a person" "associated with" a
struck company, the “enterprise,” and, if
so, may the union "indirectly"
"participate" in the "conduct" of the

\ company's "affairs" by directing

“racketeering acts" of "arson" and

"extortion" against it?

(3) May “acts" of "racketeering
activity” not directed toward the struck
company be included in the "pattern of
racketeering activity” constituting the
"violation" based on which the _ struck
company sues the striking union?

(4) May construing the statute to
answer each of these questions in the
negative be squared with its liberal
construction directives?

The Court of Appeals for the District
of Columbia Circuit, in a panel opinion and

sitting en banc, answered these issues in

the negative.
This Petition seeks review of these

judgments.

ii

List of Parties

The following parties, exclusive of amici,
appeared below:
Yellow Bus Lines, Inc.* (formerly a
school and charter bus company)
Maria Triggs
Paula Westgate
Peter McKinnon
Drivers, Chauffeurs & Helpers
Local 639, International Brotherhood
of Teamsters
James F. Woodward
Michael DiPalermo

District of Columbia

*Petitioner Yellow Bus has no parent
companies or subsidiaries to list pursuant

to Rule 29.1.

iii

TABLE OF CONTENTS

QUESTIONS PRESENTED ..... -

LIST OF PARTIES .....+ + « -»

TABLE OF CONTENTS ....- + «© «

TABLE OF AUTHORITIES .....

OPINIONS BELOW .....-.-. -»

JURISDICTION ... «© «© «© © © «

STATUTORY PROVISIONS INVOLVED .

STATEMENT OF THE CASE .....

SUMMARY OF REASONS FOR GRANTING

WRIT.

. 7 as ® . ° . . a 7 °

REASONS FOR GRANTING THE WRIT

he

This Court Must Review
and Reconcile
Conflicting Circuit
Court Decisions On The
Construction of RICO,
An Important Federal
Avenue of Relief For
Victims of Aggravated
Forms of Criminal
Conduct in the Areas
of Organized Crime,
Political Corruption,
White-Collar Crime,
Terrorism and Violent
Groups Generally .

iv

iv

vi

y Yellcw Bus, Inc.'s
Petition Affords An
Excellent Vehicle to
Revi.ew Several
Conflicting Circuit
Court of Appeal
Decisions ese *«. 6 «@ . ae

oO PE SS er ee ee a a

tee Be: eA ee a)

TABLE OF AUTHORITIES

CASES

SUPREME COURT

Braswell v. United States,

487 U.S. 99 (1988) ..

Blue Chip Stamps v. Manor

PAGE

* . 14

Drug Store

421 U.S. 723 (1975) °

Fort Wayne Books, Inc. v.

o « « 2

Indiana,

109 S. Ct. 916 (1989) .

Gebardi v. United States,
287 U.S. 112 (1932) . .

Herman & McLean v. Huddleston,

455 U.S. 375 (1983)...

7 ae

i.e 0 oF

H. J. Inc. v. Northwestern Bell

Telephone Co.,
109 S. Ct. 2893 (1989)

Iannelli v. United States,

420 U.S. 770 (1985). .

New York Cent. & Hudson River

R.R. v. United States,
212 U.S. 481 (1909) . .

Russello Y. United States,

465 U.S. 576 (1983) .

Sanabria v. United States,

437 U.S. 54 (1978) ..

Sedima, S.P.R.L. v. Imrex,

473 U.S. 479 (1985) ..

S.E.C. v. National Securities,

2 Be ae
sie Qty ae

ee Oy. ae

10, 21

17

11, 21,
27, 28

Co.,

393 U.S. 453 (1969) .

vi

° 19

if

United States v. Batchelder,

U.S. 114 (1 seeee « 41, 24

United States v. Powell,
MICA PEGs, « ow wh Cl 28

United States vy. Ragen,
a

United States v. Turkette,
Gua Webs BPO taweap - - ---- 11, 19

Village of Hoffman Estates v.
Flipside Hoffman Estates, Inc.,
MES og 5g 5g ct tl tC C28

COURT OF APPEALS

Bank of America v. Touche
Ross & Co.

782 F.2d 966 (11th Cir. 1986) . . 25

Bennett v. Ber
~ 9710 F.2d 1361 (8th Cir.), cert
denied, 464 U.S. 1008 (1983) . . 16

B. F. Hirsch v. Enright Refining Co.,
751 F.2d 628 (3rd Cir. 1984) . . 15

Blake v. Dierdorff,
856 F.2d 1356 (9th Cir. 1988) . . 25

Haroco v. American Nat'l Banks &
Trust Co. of Chicago,
- 9747 F.2d 384 (7th Cir. 1984),
aff'd, 473 U.S. 606 (1985) .. 19, 21

Landry v. Airline Pilots
Association Int'l,
- 9O1 F.2d 404 (5th Cir. 1990) . . 27

Marshall & Ilsley Trust Co. v. Pate,
819 F.2d 806 (7th Cir. 1987) . . 27

vii

Schofield v. First Commodity Corp.

of Boston

783 F.2d 28 (list Cir. 1986) .. . 15

Sedima S.P.R L. v. Imrex,
"9741 F.2d 482 (2nd Cir. 1984),
rev'd, 473 U.S. 479 (1985) .. . 4

Tarrant v. Ponte,
751 F.2d 459 (lst Cir. 1985) . . 21

Town of Kearny v. Hudson Meadows
Urban Renewal Corp., 829 F.2d
. 6 wo Fee | yd Py

United States v. Angiulo,

897 F.2d 1169 (ist Cir. 1990) . . 23
United States v. Hartley,

678 F.2d 961 (1ith Cir. 1982),

cert. denied, 459 U.S. 1170
(1983) ae |

United States v. Local 560,
780 F.2d 267 (3rd Cir. 1985),
cert. denied, 476 U.S. 1140
(1986) eee aves.» «- &&

United States v. Tillen,
906 F.2d 814 (2nd Cir. 1990) . . 16

FEDERAL STATUTES

ae Se rr |
P.L. 91-452, 84 Stat. 923 (1970) 9, 18
84 Stat. 947 (1970) {ere we

viii

LEGISLATIVE MATERIALS

Federal Government's Use Of The

RICO Statute

Other Efforts

a t aniz

Crime,

S. Rep. No. 101-407, 101st Cong.,

2nd Sess. (1990)

H. R. Rep. No. 1088,
2nd Sess. (1988)

ae R. Rep. No.
2nd Sess. (1970)

Oversight Civil RICO:

100th Cong.,

1549, 91st Cong.,

Hearings Sen.

Jud. Comm., 99th Cong.,

Sess. (1985)

Prosecuting Fraud in The Thrift

lst

Industry Hearing before The House
Justice,
(1989)

Subcomm. on Crim.

Cong., ist Sess.

101lst

S. Rep. No. 91-617, 91st Cong.,

lst Sess. (1969)

S. Rep. No. 101-269,
2nd Sess (1990)

MISCELLANEOUS

Blakey, Rico Civil Action in

101lst Cong.,

Context,
Rev. 245 (1982)

Blakey & Cessar, Equitable Relief

58 Notre Dame L.

Under Civil RICO, 62 Notre Dame

L. Rev. 526 (1987)

ix

10

25

17

10

26

17

11

22

14

Blakey and Perry, An Analysis of

The Myths That Bolster Efforts To
Rewrite RICO and the Various

Proposals Per Reform: "Mother of
God--Is This The End of RICO?" .

Blakey, "Is Pattern Void For

Vagueness?", 5 Civil RICO Report 6

(Dec. 12, 1989) ne «6 6 6

6 Civil RICO Report 1
(Sept 25, 1990) _

Conyers, Corporate and White-Collar

Crime,
17 Am. Crim. L. Rev. 287 (1980)

R. Dickerson, Fundamentals of
Legal Drafting (1965) ......

W. Hurst, The Growth of American
Law (1950) e @. #-@

N. ¥Y. Times, Feb. 7, 1989, at
D8, col. 1 >. ‘

N. Y. Times, Oct. 22, 1990, p. 1
col. i oe a ee

N. ¥Y. Times, Nov. 15, 1990,
at Ci, Col. 6 . .
Note, Civil RICO: The Temptation
and Impropriety of Judicial
Restriction, 95 Harv. L. Rev.
(1982) Ao

10,
43 Vanderbilt L. Rev. 851 (1990).14, 24

20

11

20

22

26

10

26

28

es rR ART a a aE Nas HLS HL

Oa em BEY NS 8 ale En DH ta Aah sin nN Rien omni

bt nee es ee

Note, Innocence by Association:

Entities and The Person--
Enterprise Rule Under RICO,
63 Notre Dame L. Rev. 179
(1988) Pate 4eie’ « &

The Report of the Ad Hoc Civil RICO
Task Force of The A.B.A. Section of
Corporations, Banking and the

Business Law (1985) 7 = Sra ee” |
ee 6 « « « SS

Wall St. J., Nov. 2, 1990,
Pi. 3, COL. 6 sae bie « «© &e

Webster's Third New Int'l
Dictionary (1961) ae 6 6 eo ew ae

D. Wigdor, Roscoe Pound:
Philosopher of Law (1974) .... . 22

xi

oo

OE ete 0 Re wR

a

No.

IN THE SUPREME COURT OF THE UNITED STATES
October Term, 1990

\
YELLOW BUS LINES, INC.
Petitioner,

Vv.

DRIVERS, CHAUFFEURS, & HELPERS
LOCAL UNION 639, et.al.
Respondents.

PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA

OPINIONS BELOW

The Court of Appeals opinions are
reported at 913 F.2d 848 and 883 F.2d 132.
They are reproduced at App. pp. 1-44, 45-
102. The District Court opinion is
reported at 686 F.Supp. 1, and reproduced
at App. pp. 103-121.

JURISDICTION

The en banc Court of Appeals judgment

was entered on September 4, 1990. This

eke ee

ee

Petition is timely filed. Jurisdiction is

invoked under 28 U.S.C. § 1254(1) and Rule

10.1(a) of this Court.
STATUTORY PROVISION INVOLVED

Title 18, United States Code,

relevant part, provides:
§ 1961. Definitions.

As used in this chapter--

(1) “racketeering activity"
means...any act or threat
involving...arson [or]
extortion...;

XXX

(3) “person” includes any
individual or entity...;

(4) “enterprise” includes
any individual...or other legal
entity, and any union...;

(5) "pattern of
racketeering activity” requires
at least two acts of

racketeering activity...
§ 1962. Prohibited activities.
XX X
(c) It shall be unlawful
for any person employed by or
associated wich any
enterprise...to conduct or
participate, directly or
indirectly, in the conduct of
such enterprise's affairs
through a pattern of
racketeering activity....
§ 1964. Civil remedies.
XX X
(c) Any person injured in

in

oe adhe Ah

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

84 Statutes at Large 947 provides:

Section 904 (a) The provisions
of this title shall be liberally
construed to effectuate its
remedial purposes. -

(b) Nothing in this title
shall supersede any provision of
Federal, State, or other law
imposing criminal penalties or
affording civil remedies in
addition to those provided for
in this title.

STATEMENT OF THE CASE

Yellow Bus Lines, Inc. ("Yellow Bus")
sought damages under 18 U.S.C.§1964(c)
("RICO") for its injury from a recognition
strike, characterized by violence and
intimidation that constituted arson and
extortion, including threats made to cut
brake lines on school buses, followed by
years of sabotage of its equipment and

operations, all of which forced it out of

business. The suit was brought as a

counter claim to a suit filed by James F.
Woodward, the business agent and trustee of
Drivers, Chauffeurs, and Helpers Local 639
(Local 639), who sued a police officer, the
District of Columbia, and officers of
Yellow bus, alleging false arrest, for an
incident during the strike in which
Woodward threatened to burn the company's
buses; Woodward was arrested; he was later
charged in a three count indictment for
threatening to damage the buses and to kill
three men at another strike site. The
District Court dismissed the RICO count

relying, in'part, on Sedima, S.P.R.L., v.

Imrex, 741 F.2d 482 (2nd Cir. 1984), rev'd.
473 U.S. 479 (1985), but retained malicious
destruction of property and intentional
interference with contractual relations
counts. After a nine day trial, the jury
awarded Yellow Bus $133,200 against

Woodward and Local 639. In turn, the

District Court set aside the verdict,

except for an award of $1,280 against
Woodward. 686 F.Supp.1. A panel of the
Circuit Court upheld the District Court's
decision, but reinstated the jury's verdict
against Local 639 for malicious destruction
of property, end, in reliance on Sedima,
473 U.S. 479, reinstated the RICO claim
against Woodward. The Panel agreed with
the District Court that Local 639 could not
be both a "person" and an "enterprise"
under 18 U.S.C.§1962(c), but held that
Yellow Bus should have been permitted to
amend to allege itself as the “enterprise.”
839 F.2d at 792-95. It also held that acts
not directed at Yellow Bus had to be
excluded from the "pattern" that Yellow Bus
alleged against Local 639. 839 F.2d at
789. This Court remanded the decision for

reconsideration in light of H.J.,Inc. yv.

Northwestern Bell Telephone Co., 109 S.Ct.

2893 (1989). 109 S.Ct. 3235. The Panel

reaffirmed its decision. 883 F.2d 132.

The Circuit Court granted en banc review,

and held that Local 639, a "person," did

not "participate" in the conduct of Yellow
Bus's affairs, the "enterprise," when it
engaged in arson and extortion; it
permitted the claim for relief to continue
against Woodward. 913 F.2d at 956. In

reaching its decision, the en banc Court

left “undisturbed” the reasoning of the
Panel on the "person-enterprise” issue, 913
F.2d at 951, and did not address the
"pattern" issue, 913 F.2d at 956 n.5.
Instead, it focused its "attention...f[on
the] motion by Yellow Bus to amend its
complaint to name itself...as the
enterprise with which Local 639 as
person...was associated, and in the conduct
of whose affairs...[{it] participated by a
pattern of racketeering activity.” 913
F.2d at 951.

Finding that "conduct" is Synonymous

with "management" or "direction", 913 F.2d

at 954 (citing Webster's Third New Int'l

Dictionary 473 (1961)), the Court held that

the Local 639 "through its organizationai
efforts and the activities allegedly
associated with its strike for recognition
did not conduct or participate in the
conduct of Yellow Bus's affairs." Id. at
956. Recognizing that its decision
confiicted with those of other circuits,
the Court, to justify its decision, cited
concerns of the "delicate balance between
labor and management interests" and the
need to construe "penal statutes"
"narrowly". Id. at 955. While recognizing
that the result was "as it ought to be,”
913 F.2d at 957, Judge Mikva, the author of
the Panel opinion, concurring, expressed
"misgivings" and recognized "bluntly,
[that] the appellate courts are all over
the lot." Id. For him, the Court's

decision, as a matter of law, not policy,

"“contravene[d] the very broad words of the
statute and the apparent intent of its
drafters” and the teachings of this Court

in H.J. Inc. and Sedima. Id.

SUMMARY OF REASONS FOR
GRANTING WRIT

This Court must review and correct the
Gecision of the Circuit, since it is
inconsistent with the text of _ RICO,
particularly its liberal construction
directive, the teachings of this Court, and
represents on each questioned holding
multiple conflicts with other circuits. It
also threatens the viability of RICO
criminally and civilly in the white-collar
crime area, in particular in the thrift

crisis.

REASONS FOR GRANTING THE WRIT

1. This Court Must Review and Reconcile

Conflicting Circuit Decisions on_ the

Construction of RICO, An Important Federal

Avenue of Relief For Victims of Aggravated

Forms of Criminal Conduct in the Areas of

Organized Crime, Political Corruption,

White-Collar Crime, Terrorism and Violent

Groups Generally.

Today, the construction of pivotal
terms and phrases--"person,”" "enterprise,"
"indirectly," "participate in the conduct
og," “affairs,” and "pattern”--in an
important federal statute authorizing
criminal and civil sanctions is the subject
of conflicting decisions of the circuit
courts of appeals.

In 1970, Congress enacted the
Organized Crime Control Act, Title IX of
which is known at "RICO". At first, the
Department of Justice and private litigants
moved slowly to use RICO criminally or
civilly. Today, it is the prosecutor's
tool of choice in organized crime, labor
racketeering, political corruption, white-

collar crime, terrorism, and violent white-

hate, black-hate or anti-Semitic group

prosecutions. Oversight Civil RICO:

Hearings Sen. Jud. Comm., 99th Cong., list
Sess. 106, 109-11 (1985) (testimony of Ass.
A.G. Trott).? RICO prosecutions are
running at the rate of approximately 110
per year, of which 48% are in the political
corruption and white-collar crime area, 39%
are in the organized crime and labor
racketeering area, and 13% are in other

areas.” In recent years, this Court

1 See also Federal Government's Use

of The RICO Statute and Other Efforts

Against Organized Crime, S. Rep No. 101-
ro , 1O1st Cong., 2nd Sess. 31-36 (1990)
("The successful prosecution of...
[organized crime] families...resulted
from innovat[ive]... use... of RICO
statute...."); N.Y. Times, Oct. 22, 1990,
p.1 col.1 (decline of Mafia attributed by
law enforcement officials to "developing
cases against the top leadership of
organized families and relying largely
on...RICO, as a court room tool.")

2 Blakey & Perry, An Analysis of the
Myths That Bolster Efforts to Rewrite
RICO and The Various Proposals For
Reform: "Mother of God--Is This The End
of RICO?,” 43 Vanderbilt L. Rev. 851,

1020 (1990) ("Myths"). —

10

turned aside efforts to construe RICO
narrowly in two criminal appeals. United
States v. Turkette, 452 U.S. 576 (1981);

Russello v. United States, 465 U.S. 576

(1983).

Private parties did not begin to bring
civil RICO suits until about 1975. Civil
suits are now running at the rate of
approximately 1,000 per year. Myths at
1018-19. This Court turned aside efforts
to construe RICO narrowly in two civil

appeals. H.J. Inc. v. Northwestern Bell

Telephone Co., 109 S&S. Ct. 2893 (1989);

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

(1985).

Congress, however, is moving to narrow
the scope of civil RICO. See S. Rep. No.
101-269, 10lst Cong., 2nd Sess. (1990)
(reporting S. 438); 6 Civil RICO Report 1
(Sept. 25, 1990) (noting reporting of H.R.
5111). Nevertheless, the pending

legislation does not deal with the issues

11

raised by this Petition.

The resolution of these issues by the
Circuit substantially narrows the reach of
criminal and civil RICO. Each of the
issues presented by this Petition reflects
fundamental and irreconcilable conflicts
with the teachings of this Court and among
the circuit courts of appeal.

2. Yellow Bus Inc.'s Petition Affords An

Excellent Vehicle to Review Several

Conflicting Circuit Courts of Appeal

Decisions.

The Yellow Bus litigation is fully
ripe. It was tried to a jury. It was
thoroughly analyzed by a panel opinion and
an en banc review. The issues raised have
been the subject of litigation in other
circuits and related commentary. It is not
likely that postponement of review will
contribute to the lower courts working out
their conflicts. Nor does it seem likely

that Congress will take up these pressing

12

issues. The basic arguments are well-

developed, the lines of differences drawn,
and the positions taken.

The "“person-enterprise” rule is the
subject of a conflict, as the Circuit
noted. 913 F.2d at 951 (citing United
States v. Hartley, 678 F.2d 961, 989-90

(llth Cir. 1982), cert. denied, 459 U.S.

1170 (1983). Hartley is, of course, a

"minority of one,” but it was correctly
decided, and it is in good company. See

_ The Report of the Ad Hoc Civil RICO Task

Force of the A.B.A. Section of Corporation,

Banking and Business Law 366-77 (1985)

("A.B.A.") (noting six reasons supporting

the Hartley result).?

The position adopted by the Circuit is

3 The development and rationale of
the rule is traced, analyzed, and soundly
criticized in Note, Innocence by
Association: Entities and the Person -
Enterprise Rule Under RICO, 63 Notre Dame
L. Rev. 179 (1988).

13

EE ™

not only in error, but it has spawned and

been accompanied by other rules “that
threaten to eviscerate the statute,
particularly as it applies to white-collar
crime." Myths at 863 n.29.‘ Such crime

is "'the most serious...crime problem in

America today.'" Braswell v. United

States, 487 U.S. 99, 115 n.9 (1988)

(quoting Conyers, Corporate and white

Collar Crime, 17 Am. Crim. L. Rev. 287, 288

(1980)).

Ostensibly, the "person-enterprise"
rule stems from two considerations, neither
of which support it. First, it is said to
be rooted in a belief that an enterprise

cannot, under the language cf the statute,

‘ The rules preclude the

application of principles of secondary
liability under Section 1962(c) and
impose a standing requirement (injury by
use or investment, not racketeering
activity) on clsims under Section
1962(a). See ABA at 370; Myths at 863
n.29; Blakey & Cessar, Equitable Relief
Under Civil RICO, 62 Notre Dame L. Rev.
526, 581 n.235 (1987).

14

els 45g es 40

a

-_— a ee”

_ ——

be “employed or associated with" itself.

See, @.g. Schofield v. First Commodity

Corp. of Boston, 793 F.2d 28 29-34 (1st

Cir. 1986). To be "self associated" may be
a strain on the normal use of words, but to
be “self employed” hardly departs from
standard usage. Second, the rule is said
to reflect an unease at the prospect of
holding an enterprise liable, when it is

the victim of the racketeering. See, e.g.

B.F. Hirsch v. Enright Refining Co., 751

F.2d 628, 633-34 (3rd Cir. 1984). "[T]Jhis
hardly seems a reason to fashion a general
rule that applies even when the enterprise
is not the victim, but is instead the
perpetrator." ABA at 374 n.607 (emphasis
in original). Here, too, Local 639 is the
perpetrator, not the victim. Moreover, the
intent to benefit rule, a prerequisite to

finding federal criminal respondeat

superior, New York Cent. & Hudson River

R.R. v__United States, 212 U.S. 48I, 495

15

(1909); United States v. Local 560, 780

F.2d 267, 284 (3rd Cir. 1985), cert.
denied, 476 U.S. 1140 (1986), and the

victim exclusion rule, Gebardi v. United

States, 287 U.S. 112, 117, 121-22 n.5
(1932); United States v. Tillen, 906 F.2d

814, 822-24 (2d Cir. 1990), work,
independent of any special RICO rule, to
preclude secondary liability for
enterprises, when they are victims or
merely a instruments. As such, the
"person-enterprise” rule is unnecessary.
Here, too, Local 639 was neither a victim
nor a passive instrument. Accordingly, the
"“person-enterprise” rule unjustifiably
circumscribes RICO's proper reach to hold
a perpetrator responsible for its conduct.

The construction of "participate in
the conduct of" adopted by the Circuit--
"operation or management”"--represents the

minority view among the circuits; it is

supported only by dictum in Bennett v.

16

a

SS

Berg, 710 F.2d 1361, 1364 (8th Cir.) (en
banc), cert. denied, 464 U.S. 1008 (1983).

Candidly, the Circuit recognized that the
Eighth Circuit’s position was “the most
restrictive view." 913 F.2d at 953. It
sought to justify its adoption of the
narrow view by reference to dictionary
meaning. Id. at 954. But it ignored an
alternative--and more plausible--meaning

set out in the same source. See Webster's

Third New International Dictionary 473
(1961) ("behavior"). It also ignored this
Court's construction of the key word in a
parallel provision of the same Act.

Sanabria v. United States, 437 U.S. 54, 70

n.26 (1978) ("conduct” in Title VIII,
construed to mean "any degree of

participation"); see also H.R. Rep. No.

1549, 91st Cong., 2nd Sess. 52-54 (1970)
(commentary on Title VIII) ("both high
level bosses and street level employees”).

The Circuit sought to bolster its

17

dictionary meaning approach with policy

considerations: maintenance of the
delicate balance between labor and
management and the strict construction
rule. 913 F.2d at 955. Neither supports
the Circuit's position.

Congress knew, es Judge Mikva, a
Congressman when the 1970 statute passed
and its most eloquent critic, notes, that
RICO would, in fact, impact on labor
relations. 913 F.2d at 957 (legislative

history collected). See also P.L. 91-452,

84 Stat. 923 (1970) (findings and purpose)
("to infiltrate and corrupt...labor
unions” ); 18 U.S.C. § 1961 (4)
("“enterprise” define to include "any
union"); S.Rep. No. 91-617, 9lst Cong., lst
Sess. 78 (1969) ("organized
crime...move[...] into legitimate
unions...provides...opportunity
for...extortion through...threat of

economic pressure” [in t]rucking..."). It

18

is hard to see how Congress could have

expressed its intent more "clearly and
unequivocally.” 913 F.2d 955. In short,
"Congress was well aware that it was

entering into 2 new domain.” Turkette, 452

U.S. at 586. The issue was not
application, but preemption. Congress,
however, expressly saved "provision[s] of
Federal, State or other law imposing
criminal penalties or affording civil
remedies in addition to" RICO. 84 Stat.
947 (1970). "Congress enacted RICO in
order to supplement, not supplant, the
available remedies, since it thought those
remedies offered too little protection for

victims.” Haroco v. American Nat'l Bank &

Trust Co. of Chicago, 747 F.2d 384, 392

(7th Cir. 1984), aff'd, 473 U.S. 606
(1985). Such overlap between statutes "is
neither unusual nor unfortunate.” S.E.C.

v. National Securities, Co., 393 U.S. 453,

468 (1969). It furthers remedial purposes.

19

a Z P ——* ale :
wrasse eee we” ee lee oe Bed le

Herman & McLean v. Huddleston, 455 U.S.

375, 386 (1983). The Circuit's narrow
construction of the statute, therefore,
unjustifiably undermines the _ statute's

"carefully crafted” design. Iannelli v.

United States, 420 U.S. 770, 786-89 (1975).

Nor does the strict construction rule
dictate a different result. Here, the
Circuit conflated breadth, ambiguity, and
vagueness. As such, it confused that kind
of uncertainty of application that stems
from breadth of meaning caused by the use
of broad terms, that kind of uncertainty of
application that stems from multiplicity of
meaning caused by ambiguity, and that kind
of impossibility of application that stems
from vagueness caused by the use of terms

having no meaning. See R. Dickerson,

Fundamentals of Legal Drafting 22-33 (1965)

(analysis of "major diseases of language":
generality, ambiguity and vagueness);

Blakey, "Is Pattern Void for Vagueness?",5

20

—a 4 - ee ee ee ae, a

Civil Rico Report 6, 9 n.27 (Dec. 12,
1989). RICO is neither ambiguous nor vague;

it is broad. See Sedima, 473 U.S. at 499

(citing Haroco at 398) (RICO "demonstrates

breadth,” not “ambiguity."). See also H.J.

Inc., 109 S. Ct. at 2903-05 ("broad terms,"

"broad concepts"); Russello, 464 U.S. at 21

("“participate" described as a "term" of
"breadth" ).

The strict construction rule,
moreover, has no applications to RICO,
since Congress mandated that RICO be
"liberally construed." 84 Stat. 947
(1970). The strict construction rule is
merely "a principle of statutory

construction." United States Vv.

Batchelder, 442 U.S. 114, 121 (1979). It

is not a rule of constitutional dimension.

Tarrant v. Ponte, 751 F.2d 459, 466 (lst

Cir. 1985). As such, Congress may abrogate
its application, subject to the

constitutional doctrine of void-for-

21

vagueness.°

But a statute, including RICO, is not

5 A liberal construction clause is
wide-spread in state law. Judicial
hostility to change through legislation
was common in the 19th century.

{[W]here [judges] were not
ready boldly to declare [it]
unconstitutional, [they were
ready] to interpret it so
restrictly as to narrow its
effect.

These factors found
expression in the abstract
canons of [strict] statutory
interpretation....

The effect was to put a
primarily obstructive, if not
destructive connotation on the
process of statutory
interpretation.

W. Hurst, The Growth of American Law
(1950).

Legislatures reacted: "[I]t became
standard practice in drafting statutes to
insert a preamble stating broadly the
purpose of the act and to close with a
provision declaring that the statute
should be liberally construed." D.
Wigdor, Roscoe Pound: Philosopher of Law
174 (1974). In fact, a majority of
states have abolished the common law rule
of strict construction of penal statutes.
See generally Blakey, RICO Civil Action
in Context, 58 Notre Dame L. Rev. 245
n.25 (rule analyzed and statutes
collected), 288 n.150 (liberal
construction compared to strict
construction and void-for-vagueness
doctrine) (1982).

22

hei

vague, in the constitutional sense, merely
because it is difficult to determine if
“marginal” cases fall within it. United

States v. Powell, 423 U.S. 87, 93 (1975).

Vagueness is present only when the terms
| employed have "no core” meaning.” Village

of Hoffman Estates v. Flipside Hoffman

Estates, Inc., 455 U.S. 489, 495 n.7 (1982)

(emphasis in original). Absent first
amendment considerations, not here present,
the statute, too, must be judged as

applied, not on its face. Id. Here, those

individuals who engaged in the pattern of
arson and extortion, sponsored by Local
639, can hardly be heard to complain in

"surprised innocence” when their behavior

————_—_—-—-

is found unlawful. United States v. Ragen,

314 U.S. 513, 523-24 (1942); United States

v. Angiulo, 897 F.2d 1169, 1179 (lst Cir.

1990) ("pattern” as applied "not
even...close” to being vague). If the

predicate offenses are "not

23

unconstitutionally vague, {then RICO]

cannot be vague either.” Fort Wayne Books

Inc. v Indiana, 109 S.Ct. 916, 925 (1989);

S. Rep. No. 617, 9lst Cong. lst Sess. 158
(1969) ("no due process constitutional
barrier...[{because] any proscribed
act...must violate an independent

statute.”) See also Batchelder, 442 U.S.

at 124-25 (vagueness not present when two
statutes--each with a different penalty--
apply, since defendant knows the maximum,
and no more doubt is present than when a
statute permits alternative punishments).

Finally, the gloss put on "participate
in the conduct of" by the Circuit--
"operation or management"--must be rejected
because it threatens to undermine one of
the RICO's most promising, if
serendipitous, applications: to the thrift
crisis--and the developing similar crises
in bank, insurance company, and pension

plan insolvency. See Myths at 883-909

24

(review of facts and analysis of fraud as
contributing to crises). Not all of those
who have contributed to the thrift failures

are in management. See, @e.g., Hall of

Shame: Besides S & L Owners, Host of

Professionals Paved Way in Crisis, Wall St.

J., Nov. 2, 1990, p. 1, col. 6. Yet the

Circuit rejected Bank of America v. Touche

Ross & Co., 782 F.2d 966, 970 (llth Cir.

1986), a decision that holds out promise
that RICO may be properly applied to

professionals in bank fraud. See also

Blake v. Dierdorff, 856 F.2d 1356, 1371-72

(9th Cir. 1988) (lawyers in bank fraud).
Congress recognizes the role that criminal
misconduct plays in financial insolvency.
H.R. Rep. No. 1088, 100th Cong., 2nd Sess.
2-13 (1988) (one-third of commercial banks
and three-fourths of thrift failures
criminal misconduct major factor). The
President promises "every effort to recover

assets diverted from these institutions and

25

‘t +
a4
7
iw

Wwe

we

to place behind bars those who ...caused
losses through criminal behavior." N.Y.
Times, Feb. 7, 1989, at D8, col. 1.
Tragically, the Circuit's narrow rule
threatens substantially to curtail that
effort; it could not come at a more
inopportune time.°®

Finaily, the Circuit held that the
pattern of racketeering activity
constituting the violation that injured
Yellow Bus could not include racketeering
acts aimed at another. 883 F.2d 138. Only

one other Circuit follows a similarly

® See generally Prosecuting Fraud
in The Thrift Industry: Hearings before
the House Subcomm. on Crim. Justice,
10lst Cong., ist Sess. 73 (1989)
(testimony of Associate General Counsel
G.A.0O.: as of May 30, 1989, 16 of 26
failed thrifts studied, civil suits filed
against officers, directors, borrowers,
attorneys, and related persons, 6 of
which included civil RICO counts
requesting $638 million); N.Y. Times,
Nov. 15, 1990, at Cl, col. 6 (F.D.I.C.
and R.T.C. to file $6.8 billion in RICO
Claims against Drexel Burnham Lambert,
Inc.).

26

narrow rule. Landry v. Airline Pilots

Association Int'l, 901 F.2d 404, 1261 (5th

Cir. 1990). The Seventh and Third Circuits

are in conflict. Marshall & Ilsley Trust

Co. v_ Pate, 819 F.2d 806, 809 (7th Cir.

1987); Town of Kearny v. Hudson Meadows

Urban Renewal Corp., 829 F.2d 1263, 1268

(3rd Cir. 1987) The narrow rule of the
D.C. and Fifth Circuits cannot be squared

with this Court's teaching in H. J. Inc.,

109 Ss. Ct. at 2901-02 (multiple schemes
relevant; illustration of extortion scheme
involving multiple victims).

How these narrow rules can be squared
with Congress' mandate of liberal
construction is not apparent. Nor can they
be squared with the teaching of this Court.
See, ¢6.g., Sedima, 473 U.S. at 497-98

("RICO is to be read broadly.") Indeed,
each of the positions adopted by the
Circuit was the narrowest rule available.

"RICO may be a poorly drafted statute, but

27

rewriting it is a job for Congress, if it
is so inclined, and not for" circuit

courts. B.J. Inc., 109 8. Ct. at. 2905;

Sedima, 473 U.S. at 500 ("a form of
statutory amendment [in] appropriately
undertaken by the courts"); Note, Civil

RICO: The Temptation and Impropriety of

Judicial Restriction, 95 Harv L. Rev. 1101

(1982). See also Blue Chip Stamps v. Manor

Drug Store, 421 U.S. 723, 748 (1975)

("{T)he Judiciary may not circumscribe a
right which Congress has conferred because
of any disagreement it might have with
Congress about the wisdom of creating so
expansive a liability.").

CONCLUSION

For these reasons, a Writ of
Certiorari should be issued to the Court of
Appeals for the District of Columbia.

Dated: November 30, 1990

Respectfully submitted,

YELLOW BUS LINES, INC.

28

ll At ge

By: af ec.
Thomag G. Corcoran Jr.
Counsél of Record
Henry M. Lloyd
Berliner, Corcoran,

& Rowe

1101 17th Street, N.W.
Washington, D.C. 20036
(202 )-293-5555

G. Robert Blakey
Notre Dame Law School
Notre Dame, Ind. 56556
(215) 239-5717

29

*

YELLOW BUS LINES, INC., Appellant,
Vv.

DRIVERS, CHAUFFEURS & HELPERS
LOCAL UNION 639, et al.

James F. WOODWARD
Vv.

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

Nos. 86-5135, 86-5136

United States Court of Appeals,
District of Columbia Circuit.

Argued May 9, 1990
Decided Sept 4, 1990

Appeal from the United States District

Court for the District of Columbia (Civil

Action Nos. 82-03154, 83-01232).

Thomas G. Corcoran, Jr., with whom

Henry M. Lloyd, Washington, 6: . was on

brief, for appellants in No. 86-5135 and

86-5136.

John R. Mooney, with whom Hugh J.

Beins, Washington, D.C., was on brief, for

App. 1

eve HOLY:

appellees in both cases.

Robert M. Weinberg, Lawrence Gold,
Jack Levine and George Kaufmann,
Washington, D.C. were on brief, for amicus
curi3ze, urging that the panel's decision be
reversed and the District Court ruling be
reinstated and affirmed.

Before WALD, Chief Judge, and MIKVA,
EDWARDS, RUTH 8B. GINSBURG, SILBERMAN,
BUCKLEY, WILLIAMS, D.H. GINSBURG, SENTELLE,
and THOMAS, Circuit Judges.

Opinion for the Court filed by Circuit
Judge SENTELLE.

Concurring opinion filed by Circuit
Judge MIKVA.

SENTELLE, Circuit Judge:

{1) In 18 U.S.C. § 1962(c), the
Racketeer Influenced and Corrupt
Organizations Act ("RICO") makes it
"unlawful for any person employed by or
associated with any enterprise engaged in

--- interstate ... commerce, to conduct or

App. 2

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participete, directly or indirectly, in the
conduct of such enterprise's affairs
through a pattern of racketeering
eetewitr.” In this case, the issue is:
Does a union merely by conducting a
recognition strike against an employer
"conduct or participate, directly or
indirectly, in the conduct of” the
employer's affairs within the meaning of
section 1962(c)? Our answer is that it
does not. In reaching that conclusion, we
examine the breadth of the "participation"
element of the statutory cause of action

under civil RICO.

I. BACKGROUND

A. The Statute

In 1970, Congress enacted RICO as
Title IX of the Organized Crime Control Act
of 1970, Pub.L. No. 91-452, 84 Stat. 941.
RICO is codified at 18 U.S.C. §§ 1961-68.

Although codified in Title 18, Crimes and

App. 3

fe)

Criminal Procedure, the RICO statute also
establishes civil remedies in section 1964.
That section provides in pertinent part
that
{ajJny person injured in his business
or property by reason of a violation
of section 1962 of this chapter may
sue therefor in any appropriate
United States district court and
shall recover threefold the damages
he sustains and the cost of the suit,
including a reasonable attorney's
fee.
18 U.S.C. § 1964(c).
Thus, although section 1964 creates
the civil remedy, it is to section 1962
that we must look for the substantive law
underlying the civil claim. In the present
action, the claim arises under subsection
(c) of section 1962:
It shall be unlawful for any person

employed by or associated with any

App. 4

a ee a en Sa Ea A Bele ae

CT ty ce La ATL. tg eter

enterprise engaged in, or the

activities of which affect,

interstate or foreign commerce, to
conduct or participate, directly or
indirectly, in the conduct of such

enterprise's affairs through a

pattern of racketeering activity or

collection of unlawful debt.
18 U.S.C. § 1962(c).*

[2] To make out a claim for relief "a
civil RICO claimant must prove (1) a
violation of the substantive RICO statute,
18 U.S.C. § 1962, and (2) an injury to the
plaintiff's ‘business or property by reason
of a violation of section 1962.'" Alcorn

County, Miss. v. U.S. Interstate Supplies,

Inc., 731 F.2d 1160, 1167 (5th Cir.1984).

1. Appellant also asserts a claim
under 18 U.S.C. § 1962(d). That section
simply makes it "unlawful ... to conspire
to violate ... subsection[s] (a), (b) or
(c)." As subsection (d) raises no
separate issue for analysis, our
discussion will focus on subsection (c).

App. 5

Thus, in addition to the element of injury,
a civil RICO plaintiff making a claim under
subsection (c) must prove:
(1) the existence of an enterprise
which affects interstate or foreign
commerce;
(2) that the defendant was "employed
by” or "associated with" the
enterprise;
(3) that the defendant participated
in the conduct of the enterprise's
affairs; and
(4) that the participation was
through a pattern of racketeering
activity....
Id. at 1168 (internal brackets omitted)

(citing United States v. Phillips, 664 F.2d

971, 1011 (5th Cir. Unit B 1981)).?

2, This formulation of the elements
does not differ substantively from the
authoritative outline of elements
prepared by the Supreme Court in Sedima,
S.P.R.L. v. Imrex Co., 473 U.S. 479, 105
S.Ct. 3275, 87 L.Ed.2d 346 (1985), which

App. 6

= de ee ene ee - a. Soaemtded ~ re — — 2
—— + sons he Pel ee ae A a. eg eee ose = Se eee =

In the present en_banc review, we

address the scope of the thgrd or
"participation in the conduct of affairs"
element.?

B. The Litigation

The factual background of this
litigation is set forth in some detail in
the two panel opinions previously issued in

the case. Yellow Bus Lines, Inc. v. Local

Union 639, 839 F.2d 782 (D.C. Cir. 1988),

treated injury as a standing requirement,
and outlined the elements as "(1) conduct
(2) of an enterprise (3) through a
pattern (4) of racketeering activity,"
473 U.S. at 496 (footnote omitted). The
Supreme Court in Sedima focused on
different questions than the one we
address today, and we find the Fifth
Circuit's outline more useful for our
present inquiry.

3, In the order providing for en
banc review in this case, we directed the
parties also to brief the second, or
"associational" element. Since both
parties, while briefing several other
issues not encompassed within the intent
of our en banc order, chose to ignore the
"associational" element, we leave any
review of that element by this Circuit
for some case in which the parties
properly frame the controversy.

App. 7

Vow

vacated, -- U.S. --, 109 S.Ct. 3235, 106

L.Ed.2d 583 (1989) (Panel Op. I); Yellow

Bus Lines, Inc. v. Local Union 639, 883

F.2d 132 (D.C.Cir.1989), reh'g granted
(Oct. 17, 1989) (Panel Op. II). We will
not detail those facts unrelated to the
issue before the en banc Court, but a brief
review is necessary to provide a context
for our decision.

This litigation arose out of events
surrounding a four-day strike for
recognition conducted by Local Union 639
("the Union") against Yellow Bus Lines,
Inc. ("Yellow Bus” or "the bus line") in
1981. Yellow Bus asserted a number of
claims, most of them nonfederal tort
matters. We do not address those
nonfederal causes of action as an en banc
Court, but leave intact the dispositions
entered by the panel opinions cited above.
In the claims we examine in the present

review, Yellow Bus alleged violations of

App. 8

SOOT EERE PE rere oo

iT hi

RICO, 18 U.S.C. §§ 1962(c) & (d), by the

Union and its business agent and trustee
James Woodward.

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

The language of § 1962 clearly

contemplates the interaction cf a

person and an enterprise, both

separately defined by the Act. RICO
prohibits any person employed by or

associated with an enterprise, from

participating in the conduct of such
enterprise through a pattern of
racketeering activity. RICO does not
hold the enterprise ... liable, but

only those persons who seek _ to

App. 9

participate in the affairs of the

enterprise through a pattern of
racketeering activity... The
language of RICO has been found to be
ambiguous on other issues, but we
find this language is clear and that
our interpretation is supported by
the case law.

Yellow Bus Lines, Inc. v. Local Union 639,

No. 83-1232, slip op. at 8, 1984 WL 2915
(D.D.C.June 28, 1984) ("Memorandum of June

28") (quoting Bays v. Hunter Savings

Assoc., 539 F.Supp. 1020, 1023-24 (S.D.Ohio
1982)).

Each of our panel opinions has
affirmed that decision of the District

Court, reasoning, inter alia:

Logic alone dictates that one entity
may not bats | és the enterprise and
the person associated with it
because, as Judge Posner of the

Seventh Circuit has stated, "you

App. 10

cannot associate with yourself.”

Panel Op. I, 839 F.2d. at 790 (quoting
McCullough v. Suter, 757 F.2d 142, 144 (7th

Cir.1985)); Panel Op. II, 833 F.2d at 139
(same). This nonidentity between the
"person" liable as a RICO defendant, and
the “enterprise” in whose affairs the
person has participated has been required
by a nearly unanimous majority of courts
that have considered the question (see
cases collected in Panel Op. I, 839 F.2d at
790, and Panel Op. II, 883 F.2d at 139),
although the Eleventh Circuit may
constitute a minority of one to the

contrary. See United States v. Hartley,

678 F.2d 961,989-90 (llth Cir. 1982), cert.
denied, 459 U.S. 1170, 103 S.Ct. 815, 74
L.Ed.2d 1014 (1983). As with the claims
decided under the District Court's pendent
jurisdiction, the en banc Court leaves the
panel reasoning undisturbed as to the

nonidentity requirement.

App. 1l

Although dismissing the RICO action

against the Union, the District Court
initially permitted the RICO action to
continue against Woodward. The court
reasoned that “the ‘enterprise’ ... is
properly viewed as Local 639," Memorandum
of June 28 at 10, and Woodward served as
the "person" or defendant who participated
in the enterprise's affairs under section
1962(c). Subsequently the District Court
allowed summary judgement in favor of
Woodward on the RICO claim on other grounds
explained in a memorandum of October 29,
1984. In that memorandum the District
Court followed the reasoning of the Second

Circuit in Sedima, S.P.R.L. v. Imrex Co.,

741 F.2d 482 (2d Cir. 1984), rev'd, 473
U.S. 479, 105 S.Ct. 3275, 87 L.Ed.2d 346
(1985), that a distinct "RICO injury,"
different in kind from injury resulting in
normal course from predicate acts, was

required for a civil RICO action. Between

App. 12

the time of the District Court's entry of

summary judgment and our panel's review,
the Supreme Court handed down its decision
reversing the Second Circuit in Sedima.

Sedima S.P.R.L. v. Imrex Co., 473 U.S.

479, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985).
Therefore, our panel reversed the District
Court's grant of summary judgment as to the
RICO claim against Woodward and remanded
the case for trial. Panel Op. I, 839 F.2d
at 789; Panel Op. II, 883 F.2d at 139.
Again we leave this portion of the panel's
decision undisturbed.

The question which does command the
attention of this en banc Court relates to
a motion by Yellow Bus to amend its
complaint to name itself, Yellow Bus Lines,
Inc., ae the enterprise with which Local
639 as person or defendant was associated,
and in the conduct of whose affairs that
defendant participated by a pattern of

racketeering activity. The District Court

App. 13

denied Yellow Bus's wotion, “-vasoning that

"the union's acts were not committed in the

conduct of Yellow Bus' affairs; Yellow Bus

was, if anything, merely the 'setting' for
the union's activities." Memorandum of
June 28 at 10 n. 5. On appeal, the panel
reversed this ruling, concluding that the
District Court erroneously applied an
"overly restrictive” interpretation of the
participation element. Panel Op. I, 839
F.2d at 792-94. The Union petitioned the
Supreme Court for certiorari on the RICO
issues. On July l, 1989, the Supreme Court
vacated the first panel opinion. and
remanded the case for further consideration

in light of H.J. Inc. v. Northwestern Bell

Telephone Co., -- U.S. --, 109 S.Ct. 2893,

106 L.Ed.2d 195 (1989). Local Union No.

639 v. Yellow Bus Lines, Inc., -- U.S. --,

109 S.Ct. 3235, 106 L.Ed.2d 583 (1989).
After reconsidering the matter in light of

the H.J. Inc. decision, the panel issued

App. 14

A tee a

its second opinion reiterating its original

conclusion in language identical in
pertinent part to its first opinion. Panel
Op. II, 883 F.2d at 141-44. It was on this
question that we ordered a rehearing en

banc.

II. ANALYSIS

Simply put, our task is to determine
the intent of Congress in using the phrase
"to conduct or participate, directly or
indirectly, in the conduct of [the]
enterprise's affairs," 18 U.S.C. § 1962(c).
That we may put the question with some
degree of simplicity does not mean that our
task is a simple one. The numerous courts
that have construed the participation
requirements of § 1962(c) have followed
divergent paths and have reached disparate
conclusions.

The Second Circuit--at least in dicta-

-has announced the broadest interpretation

App. 15

of the “participation in the conduct"

language. That circuit stated that
{o]Jne conducts the activities of an
enterprise through a pattern of
racketeering when (1) is enabled to
commit the predicate offenses solely
by virtue of [one's] position in the
enterprise or involvement in or
control over the affairs of the
enterprise, or (2) the predicate
offenses are related to the
activities of that enterprise.

United States v. Scotto, 641 F.2d 47, 54

(2d Cir. 1980), cert. “enied, 452 U.S. 961,

101_S.Ct. 3109, 69 L.Ed.2d 971 (1981).‘
The Scotto court acknowledged that simply

committing predicate acts which are

‘. The Ninth Circuit has adopted
the Scotto test, but has not fleshed out
the standard any more than the Second
Circuit did in Scotto. See, for example,
United States v. Yarbrough, 852 F.2d
1522, 1544 (9th Cir.), cert. denied, 488
U.S. 866, 109 S.Ct. 171, 102 L.Ed.2d 140
(1988).

App. 16

é
So ah gt a
PF dies

} me re ~~ <> at enpapensal tae a ne on Ny ay i eee ee ee Sa oT eee tt eee SD
SS ee ee eS na a ee : —— a : eee
Ps Pl set phi Dalai dN AM: he LNA A AUIS Die ae eee on Se Nee me ee em nN

7 sere SatapsoacusyrmseusiwaneP tener eat nant Setar Se ey mca nae ss = em ; : 5

unrelated to the enterprise or to one's
position in the enterprise is insufficient
to satisfy the participation requirement,
but stated:
Section 1962(c) nowhere requires
proof regarding the advancement of
the [enterprise's] affairs by the
defendant's activities, or proof that
the [enterprise] itself is corrupt,
or proof that the [enterprise]
authorized the defendant to do
whatever acts form the basis for the

charge.

Id. at 54, quoting United States v. Field,
432 F.Supp. 55, 58 (S.D.N.Y.1977), aff'd,
578 F.2d 1371 (2d Cir.), cert. dismissed,

439 U.S. 801, 99 S. Ct. 43, 58 L.Ed.2d 94

(1978). See also United States v. LeRoy,

687 F.2d 610, 616-17 (2d Cir. 1982), cert.
denied, 459 U.S. 1174, 103 S.Ct. 823, 74
L.Ed.2d 1019 (1983); United States v.

Provenzano, 688 F.2d 194, 200 (3d Cir.),

App. 17

sSoeecensnteesn== lem tp Sa Seni Soeur armed Speen pee Ne NNN Saw eee

cert. denied, 459 U.S. 1071, 103 S.Ct. 492,

74 L.Ed.2d 634 (1982).

We do not necessarily dispute the
Second Circuit's views about what section
1962(c) does not require. However, the
Scotto Court was far too lenient in its
test for what section 1962(c) does require.
If section 1962(c) can apply whatever
predicate offenses are merely related to
the activities of an enterprise, then the
"participation in the conduct" element of
that section practically drops out. Any
pattern of predicate acts remotely related
to an "enterprise," whether committed by a
mail clerk in the target enterprise or by
the C.E.0. of the enterprise's business
competitor, might give rise to RICO
‘lability under the Second Circuit's Scotto
test.

Recognizing the overbreadth of the
Second Circuit's language in Scotto, the

Fifth Circuit modified the Scotto standard

App. 18

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camneny ts ree Se ot aoe eetatenaietiod helenae — renee ot
eer tn enn op one

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to establish a more restrictive test.

United States v. Cauble, 706 F.2d 1322 (Sth

Cir. 1983), cert. denied, 465 U.S. 1005,

104 S.Ct. 996, 79 L.Ed.2d 229 (1984). The
court explained that "[t]he mere fact that
a defendant works for a legitimate
enterprise and commits racketeering acts
while on the business premises does not
establish that the affairs of the
enterprise have been conducted ‘through’ a
pattern of racketeering activity." Id. at
1332. The court thus modified the Scotto
standard by joining the two parts of the
Scotto test with an "and" rather than an
"or." Id. at 1333. Under the Cauble
court's rule, the predicate racketeering
acts must have some effect on the lawful
enterprise and the defendant's position in
the enterprise must facilitate the
defendant's comission of those
racketeering acts.

The Eighth Circuit, en banc,

App. 19

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articulated probably the most restrictive
view of the scope of the "participation in
the conduct" requirement. Offering a
district court guidance for evaluating a
Plaintiff's complaint on remand, that
circuit wrote:
Mere participation in the predicate
offenses listed in RICO, even in
conjunction with a RICO enterprise,
may be insufficient to support a RICO
cause of action. A defendant's
participation must be in the conduct
of the affairs of a RICO enterprise,
which ordinarily will require some

participation in the operation or

management of the enterprise itself.

Bennett v. Berg, 710 F.2d 1361, 1364 (8th

Cir.), cert. denied sub nom. Prudential

Ins. Co. v. Bennett, 464 U.S. 1008, 104

S.Ct. 527, 78 L.Ed.2D 710 (1983) (emphasis
supplied) (citation omitted).

The Eleventh Circuit rejected such an

App. 20

v/a 4

a AE r "
SE 2 i i Aa Ae A A es a ce ge nA =

"operation or management" test, expressly

stating, "It is not necessary that a RICO
defendant participate in the management or

operation of the. enterprise." Bank of

America v. Touche Ross & Co., 782 F.2d 966,

970 (llth Cir.1986). The Touche Ross court

rejected the defendants' argument "that
Congress intended to limit the reach of a
civil RICO action by imposing a ‘'conduct'
requirement, i.e., that defendant conducted
or participated in the conduct of a RICO
enterprise in a significant manner." Id.
In the Eleventh Circuit's view, "This
argument ignores the ‘directly or
indirectly’ language of § 1962(c)." Id.
The court emphasized:

The substantive proscriptions of the

RICO statute apply to insiders and

outsiders--those merely ‘associated

with' an enterprise--who participats

Girectly and indirectly ir the

enterprise's affairs through a

App. 21

art

pattern of racketeering activity...
The RICO net is woven tightly to trap
even the smallest fish, those
peripherally involved.

Id. (quoting United States v. Watchmaker,

761 F.2d 1459, 1476 (llth Cir.1985), cert.

denied sub nom. Harrell v. United States,

474 U.S. 1100, 106 S.Ct 879, 88 L.Ed.2d 917 .
(1986). The Eleventh Circuit concluded
that the word "conduct” in section 1962(c)
"simply means the performance of activities
necessary or helpful to the operation of
the enterprise.” Id. (citations omitted).

Several circuits have rejected the
Eleventh Circuit's conclusion that conduct
of an enterprise's affairs means activity
that denefits the enterprise. For example,
the Fourth Circuit explicitly modified a
previous decision that had arguably
established a strict benefits’ test,

explaining that a defendant's efforts need

not produce financial profit for the

App. 22

enterprise to qualify the defendant as a
participant. United States v. Webster, 669

F.2d 185, 186-87 (4th Cir.), cert. denied,

456 U.S. 935, 102 S.Ct 1991, 72 L.Ed.2d 455
(1982). The court stated that the
important question is whether the affairs
of an enterprise are conducted through a
pattern of racketeering activity, but the
court did not define "conducted" more
specifically. Id. The Seventh Circuit
also explicitly rejected the benefits test,

quoting Webster. United States v. Kovic,

684 F.2d 512, 516 (7th Cir.), cert. denied,

459 U.S. 972, 103 S.Ct. 304, 74 L.Ed.2d 284
(1982).

As did these other circuits, we find
the Eleventh Circuit's approach
problematic. While that circuit viewed the
Eighth Circuit's "operation and management"
standard as ignoring the “directly or
indirectly" language of section 1962(c),

and thereby precluding section 1962(c)'s

App. 23

applicability to outsiders, this does not
appear to be the case. The “operation and
management" standard requirement can as
easily be applied to--for example--an
organized crime boss who pulls the strings
of a corporation through a puppet president
as it can to the corporation president
himself. We see no inconsistency between
the Eighth Circuit's "operation oor
management" standard and the language of
the statute. Rather, it appears that the
view expressed by the Eleventh Circuit in

Touche Ross ignores the language of the

statute by eliminating the impact of the
"conduct" requirement. Indeed, the
Eleventh Circuit omitted the word "conduct"
in its statement of section 1962(c)

requirements. See Touche Ross, 782 F.2d at

970 (section 1962(c) applies to those "who
participate ... in the enterprise's affairs
through a pattern of racketeering

activity") (quoting United States v.

App. 24

Ahem

Poe De

So 3
ew rate
eet eee

jeep aes ee pers
ne I i:

“

Pee ee ee — — : =

Watchmaker, 761 F.2d 1459, 1476 (11th Cir.

1985), cert. denied sub nom. Harrell v.

United States, 474 U.S. 1100, 106 S.Ct.

879, 88 L.Ed.2d 917 (1986)). Congress, we
stress, did not proscribe mere

participation in the enterprise's affairs

through a pattern of racketeering activity,
but rather, subjected participation in the

conduct of an enterprise's affairs to RICO

liability. 18 U.S.C. § 1962(c).

[3] "Conduct" is synonymous with
"management" or "direction." Webster's
Third New International Dictionary 473
(1961). The “conduct of [the enterprise's]
affairs" thus connotes more than just some
relationship to the enterprise's activity;
the phase refers to the guidance,
management, direction or other exercise of
control over the course of the enterprise's
activities. In order to participate in the
conduct of an enterprise's affairs, then,

a person must participate, to some extent,

App. 25

ws

on

Lewes OS

in "running the show."

[4] Because "conducting" connotes
more than merely "participating in"
affairs, we conclude that the Eighth
Circuit hit closest to the mark when it
construed the "participation in the

conduct" requirement in its Bennett v. Berg

decision. 710 F.2d at 1364. Section
1962(c) applies when a defendant, through
a pattern of racketeering activity,
exercises significant control over or
within an enterprise, participating not
merely in the enterprise's affairs, but in

the conduct of the enterprise's affairs.

Most often the participation requirement
will be satisfied when a defendant either
participates in directing the enterprise
toward its preexisting goals or
participates in exercising control over an
enterprise so as to reset its goals. As
the Eighth Circuit observed, most of the

time this requirement will only . be

App. 26

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satisfied when the defendant, either
directly or indirectly, exercises control
over the management or operation of the
enterprise. Id. We note that our
construction of the statute does allow for
participation in the conduct of an
enterprise's affairs by "outsiders" as well
as "insiders." Section 1962(c) provides
that participation may be indirect as well
as direct, 18 U.S.C. § 1962(c), and nothing
in our interpretation of the participation
requirement precludes liability on the part
of outsiders. The crucial question is not
whether a person is an insider or an
outsider, but whether and to what extent
that person controls the course of the
enterprise's business.

This construction of the statute is
not only faithful to the language of the
statute; it is the interpretation
consistent with the statute's goals. The

purpose of RICO is to eliminate "the

App. 27

Fr. - eee ee
alata ia a

a 3G aot +

i a a OE hd on SS er
jae Sen

infiltration of organized crime and
racketeering into legitimate organizations
operating in interstate commerce." S.Rep.

No. 617, 91st Cong., lst Sess. 76 (1969)

Sil, tainataas Report"). The Senate Report
discugses at length the threat to the
American economic system posed by the
acquisition of control over legitimate
businesses, entire industries, and unions
by organized crime. The statute was not
designed to reach every act of corruption
or petty crime committed in a business
setting, but was passed in order to attack
"the yse of force, threats of force,

enforcement of illegal debts, and

corruption in the acquisition or operation

of business. " Id. at 81 (emphasis
supplied). Sections 1962(a), (b), and (c)
work Pv oe to proscribe the various
different means by which such illegitimate

acquisitiion or operation of business can

occur. See also H.Rep. No. 1549, 91st

App. 28

Cong., lst Sess. 27 (1970), reprinted in

1970 U.S. Code Cong. & Admin. News 4007,
4033 ("Section 1962 establishes a threefold
prohibition aimed at stopping the
infiltration of racketeers into legitimate
organizations.").

[5] Congress, in enacting the RICO
statute, did not purport to outlaw the
commission of the predicate acts. It
sought rather to outlaw the commission of
the predicate acts only when those acts
were the vehicle through which a defendant
"conduct[{ed] or participat[ed] ... in the
conduct of [the] enterprise's affairs."
Section 1962(c). A simple example
illustrates this important distinction. A
terrorist who hijacked an airliner to
extort acney fron an airline has committed
an act that legally constitutes
"racketeering activity” in terms of the
RICO definitional section--1961(1)

("extortion"). And certainly this act

App. 29

would meet the literal terms of the Second
Circuit's broad "conduct or participation"
test--treating the threatened airline as
the enterprise--since the seizure of its
airplane is related to its activities of
flying, carrying passengers, and engaging
in air commerce. Nonetheless, this hardly
seems to be what Congress had in mind in
enacting RICO. If, on the other hand, a
potential RICO defendant hijacks not the
airliner but the airline, as for example by
either directly or indirectly taking
control of its executive management
positions, this would seem to be what
Congress in fact had in mind in the
enactment of the RICO statute.

A broader reading of section 1962(c)
would not only fly in the face of the
statute's language and purpose, but would
work a major restructuring of our legal
landscape. For instance, as the present

case illustrates, an elaborate web of

App. 30

statutes and regulations governs labor
management relations. If appellant is
correct that by conducting the strike and
organizational effort the Union
participated in the conduct of the affairs
of Yellow Bus, Panel Op. II, 883 F.2d at
144, then, provided the requisite pattern
of racketeering activity could be shown,
RICO might apply in the context of
innumerable labor-management clashes.
Judge Edwards noted in his concurrence to
the panel's opinion, "This result seems
strangely at odds with certain fundamental
precepts of labor law and collective
bargaining.” Id. at 145. We agree.
Federal labor law has been crafted to
strike a delicate balance between labor and
management interests. The Supreme Court
has stated, for instance, "Accommodation
between employees’ § 7 rights and
employers’ property rights ... ‘must be

obtained with as-little destruction of one

App. 31

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as is consistent with the maintenance of

the other.'" Hudgens v. NLRB, 424 U.S.

507, 521, 96 S.Ct. 1029, 1037, 47 L.Ed.2d
196 (1976) (quoting NLRB v. Babcock &

Wilcox Co., 351 U.S. 105, 112, 76 S.Ct.

679, 684, 100 L.Ed. 975 (1956)). By giving
management a potentially powerful weapon to
wield against striking workers, the result
the bus line urges would reset the labor
management balance. Congress is certainly
free to lay an extensive RICO blanket over
entire areas of federal regulation, making
attorneys fees and treble damages available
in areas such as federal labor law.
However, we are confident that if Congress
had intended to so dramatically alter our
legal terrain, it would have done so
clearly and unequivocally.

The problems arising from the bus
line's proposed interpretation are of
course not limited to labor law. We see no

logical reason why a union attempting to

App. 32

gain recognition from a company is any more
participating in the conduct of the
company's affairs than is any other
external entity attempting to contract with
the putative enterprise. To adopt the
broad interpretation of the participation
requirement urged by Yellow Bus would
federalize broad areas of state common law
of contracts, and "RICOize" broad areas of
labor law and other federal laws governing
relationships not readily identifiable as
being within the enacting intent of
Congress.

[6, 7] While not essential to our
decision, we note that our construction of
the statute is consistent with the general
rule that ambiguous penal statutes ought to
be construed narrowly against the accused.

Busic v. United States, 446 U.S. 398, 406,

100 $s.Ct. 1747, 1752, 64 L.Ed.2da 381
(1980). Although arguably a broad reading

of section 1962(c) would be consistent with

App. 33

Congress's express intention that RICO be
liberally construed in order to effectuate
its remedial purposes, Panel Op. II, 833
F.2d at 143, violations of section 1962(c)
can lead to criminal as well as civil
penalties. See 18 U.S.C. § 1963. In
interpreting section 1962(c) we must bear
in mind that “ambiguity concerning the
ambit of criminal statutes should be
resolved in favor of lenity." Busic, 446
U.S. at 406, 100 S.Ct. at 1752 (internal
citations omitted). If the scope of
section 1962(c) is not clear from its plain
language, this rule of lenity counsels in.
favor of a narrow reading of the statute's
reach. RICO, because it has criminal as
well as civil applications, must "possess
the degree of certainty required for

criminal laws." H.J. Inc. v. Northwestern

Bell Telephone Co., -- U.S. --, 109 S.Ct.

2893, 2909, 106 L.Ed.2d 195 (1989) (Scalia,

J., concurring). For this reason, we

App. 34

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cannot endor the broad and boundless
reading of section 1962(c) urged by Yellow
Bus.

We senate, then, that the proper
standard for ereiveting the participation
element, required by the language and
purpose of section 1962(c), is one which
distinguishes between participation in the

atfairs of an enterprise and participation

in the conduct of an enterprise's affairs,

which can lead to the hijacking of
legitimate businesses through illegal
activities. When it passed RICO, Congress
targeted only this latter sort of
participation.

Applying this standard to the facts
before us, we conclude that the Union,
through its organizational efforts and the
activities allegedly associated with its
strike for recognition, did not conduct or
participate in the conduct of Yellow Bus'‘s

affairs. Rather, the Union, acting as a

App. 35

party with interests adversw to those of
Yellow Bus, conducted only its own affairs
as an enterprise. The Union's aileged
activities do not constitute the sort of
hijacking of Yellow Bus, in the form of
acquiring and exercising centrol over
Yellow Bus's affairs, that the RICO statute
was designed to combat. The District Court
thus properly declined to permit Yellow Bus
to amend its pleadings to nare itself as
the section 1962(c) enterprise.

We note that our decision does not
preclude the application of RICO in labor
relations contexts. If, for instance,
Yellow Bus could show that some person had,
through a pattern of racketeering
activities, in effect taken control of the
Union and caused it to engage in the
alleged racketeering activities, then
section 1962(c) might reach that person.
The Union, rather than Yellow Bus, would be

the section 1962(c) enterprise in that

App. 36

case. Indeed, as we noted above, the
present action can continue against
Woodward on just such allegations. Our
hoiding thus does not rule out the
possibility of RICO liability in such
situations, but merely requires that the
named enterprise be the enterprise ectually
corrupted by the racketeering acts, not
some other enterprise incidentally affected
by the alleged racketeering activity. The
fact that the surviving claim against
Woodward in his individual capacity, in
which the Union is the named enterprise, is
not precluded by our decision here
underlines the fact that our reading of
RICO does not weed out RICO claims that
Congress intended sec .on 1962({c) to reach.

Because we conclude that the Union
could not be deemed to have conducted or
participated in the conduct of Yellow Bus's
affairs through the alleged pattern of

racketeering activities associated with the

App. 37

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alleging malicious destruction of property
and intentional interference with contract
as well as intentional infliction of
emotional distress. They also charged
Woodward and the Local with abuse of
process, claiming that Woodward filed his
false arrest claim to discover information
essential to his criminal defense and to
induce Yellow Bus to agree to the Local's
proposed contract terms. In April 1983,
Yellow Bus filed additional charges against
Woodward and the Local alleging violations
of RICO, 18 U.S.C. sections 1962(c) and
(ad). By October 1984, the district court
hed dismissed all the federal claims, but
elected to retain jurisdiction over the
tort claims. In May 1984, Woodward's false
arrest claim was dismissed after Woodward
reached a settlement with the District of
Columbia. The trial on the remaining
counts began in February 1985, and the jury

returned a verdict in favor of appellants

App. 50

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on three counts, awarding a total of
$133,200. Yellow Bus was awarded $1,280
against Woodward and $1,920 against Local
639 for malicious destruction of property,
and $40,000 against Woodward and $60,000
against the Local for intentional
interference with contractual relations.
The jury also awarded the company and its
three officers $15,000 against Woodward and
$15,000 against the Local for abuse of
process. In March 1985, the court entered
judgment for these amounts. In January
1986, the court partially granted
appellees’ JNOV motion and set aside all
except the $1,280 judgment against Woodward
for malicious destruction of property. 686
F. Supp. 1
II. JNOV.ON MALICIOUS
DESTRUCTION OF PROPERTY

In support of its claim of malicious
destruction, Yellow Bus introduced
testimony of damage to vehicles observed by

App. 51

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employees at the strike site. Although no
employee saw Woodward participate directly
in vandalism, the court found that
"circumstantial" evidence linking Woodward
to property damage, coupled with threats
made by Woodward and other strikers, was
sufficient to support the jury
determination that Woodward was liable for
the property damage. The court decided,
however, that the evidence against the
Local was insufficient to support liability
under section 6 of the Norris-LaGuardia
Act, which requires clear proof of union
responsibility for the acts of its agents.
{1, 2] Section 6 of the Norris-
LaGuardia Act states that
No officer or members of any
essceietion or organization, and no
association or organization
participating or interested in a.
labor dispute shall be held

responsible or liable in any court of

App. 52

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the United States for the unlawful
acts of individual officers, members,
or agents, except upon clear proof of
actual participation in, or actual
authorization of, such acts, or of
ratification of such acts after
actual knowledge thereof.
29 U.S.C. section 106 (1982). Section 6
applies in "federal court adjudications of
state tort claims arising out of labor
disputes.” United Mine Workers v. Gibbs,

383 U.S. 715, 737, 86 S. Ct. 1130, 1144, 16
L.Ed.2d 218 (1966); see also Ramsey v.

United Mine Workers, 401 U.S. 302, 310, 91
S. Ct. 658, 663, 28 L.Ed.2d 64 (1970). In
order to support a grant of the motion for
JNOV, the trial judge could not have found
"clear proof” of the union's participation

or authorization. See Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505,

2512-13, 91 L.Ed.2d 202 (1986). After

reviewing the record and taking all

App. 53

justifiable inferences in favor of
appellants, we conclude that 4a reasonable
jury could have found "clear proof” of
union ratification or authorization of
Woodward's actions, and that the damage
award against the Local on this count
should not have been set aside.

In evaluating whether Local 639
"ratified" the destructive acts ascribed to
Woodward "after actual knowledge” of their
perpetration, the district court failed to
take into account a crucial piece of
evidence concerning the Local's awareness
of the events which transpired during the
Yellow Bus strike. At trial, counsel for
Yellow Bus introduced without objection a
letter sent to Yellow Bus and received by
Mr. George, President of Teamster Local
639, om November 10, 1981. This letter
described with particularity “numerous
incidents of threats, violence, property

damage, and verbal abuse” by Woodward and

App. 54

other strike participants. Following this
communication, the record shows that
business continued as usual at the Yellow
Bus strike and Mr. Woodwari remained on-
site as the Local's man in charge. There
is nothing in the record to indicate that
the union took action to investigate the
allegation or to curb any excesses of
Woodward or the strikers.

{[3, 4] In the circumstances of this
case, the combination of the Local's
notification of events early in the strike,
coupled with the complete failure to act on
that knowledge, fulfills the requirement of
"proof, either that the union approved the
violence which occurred, or that it
participated actively or by knowing
tolerance in further acts which were
themselves actionable under state law.”
Gibbs, 383 U.S. at 739, 86 S. Ct. at 1146.
A union may “ratify” or “authorize” without

going so far as to openly encourage or

App. 55

ea — ee a ee

embrace the tactics of its official
representative. Section 6 does not impose
a requirement of such formal authorization

by the union. See James R. Snyder Co. v.

Edward Rose & Sons, Inc., 546 F.2d 206 (6th

Cir. 1976). Rather "proof of authorization
or ratification can be based upon
circumstantial evidence, but that proof,
although circumstantial, must nevertheless
be clear.” Id. at 209. From the Local's
apparent lack of concern with the violence
brought to its attention, the jury
plausibly could conclude that the Local
"knowingly tolerated" this state of
affairs. No more is required to support a
finding of ratification. In short, there
was clear proof that the other officials at
the Local ratified by knowing tolerance
those acts of violence in which Woodward
was shown to have participated.

(5) Moreover, specific proof of

"knowing tolerance” by other union

App. 56

officials was not required in order to hold

the Local directly responsible for
Woodward's actions because Woodward was
clothed with plenary authority to direct
the strike on behalf of the union. Section
6 was meant to "change[] the substantive

law of agency," Brotherhood of Carpenters

v. United States, 330 U.S. 395, 403, 67

S.Ct. 775, 780 91 L.Ed. 973 (1947), by

nullifying the doctrine of respondeat

superior in those cases where a unicn

member or official has not been charged
with directing union activities. That
provision does not serve to absolve a union
of ordinary responsibility for actions
undertaken by officers exercising
authoritative responsibility. For example,

in Charles D. Bonanno Linen Service, Inc.

v. McCarthy, 708 F.2d 1, 11 (lst Cir.),

cert. denied, 464 U.S. 936, 104 S. Ct. 346,

78 L.Ed.2d 312 (1983), evidence that a

union representative "with the power and

App. 57

authority” to orchestrate a strike and

discipline participants took no action to
curb strike violence was held sufficient to
establish liability of a union local. As

the Bonanno court observed, "the Supreme

Court has held that the union need do no
more than authorize an agent's general

activity.” Id. at 12 (citing Brotherhood

of Carpenters v. United States, 330 U.S. at

410, 67 S.Ct. at 783 ("The grant of
authority to an officer of a union to
negotiate agreements with employers * * *
may well be sufficient to make the union
liable.”)).

As to the union's authorized
representative, Woodward was empowered to
conduct the union's business at Yellow Bus.
Since Woodward was the designated union
presence on the site authorized to run the
strike, his acts can be considered the
union's acts for which the union is

responsible. See United Mine Workers of

App. 58

America v. Meadow Creek Coal Co., 263 F.2d

52, 63 (6th Cir.), cert. denied, 359 U.S.

1013, 79 S.Ct, 1149, 3 L.Ed.2d 1038 (1959)
(high union official in charge of a strike
and directly involved in its unlawful
activity "was high enough in the hierarchy
* * * to render [the] organization liable
for the consequences of conduct of its
members under his general leadership”); see

also Kayser~-Roth Corp. v. Textile Workers

Union of America, 479 F.2d 524, 527-28 (6th

Cir.) cert. denied, 414 U.S. 976, 94 S.Ct.

292, 38 L.Ed.2d 219 (1973) (acts of high
officials in violation of state law deemed
"participation" for purposes of union
liability under section 6).

ie 2 In sum, "{i]Jf a _ union
delegates to an agent unrestricted
authority going beyond the norms of union
conduct, section 6 does not immunize it
from liability for his illegal acts.

Similarly, if it continues him in a

\

App. 59

Bl cE te aa r FeO kee CON Tah

previous position of high responsibility

after knowledge of his illegal activities,
section 6 affcrds no shelter." Harlem

River Consumers Coop, Inc. v. Associated

Grocers of Harlem, Inc. 450 F.2d 271, 273-

74 (2d Cir. 1971) (citing Carpenters, 330

U.S. at 409-10, 67 S.Ct. at 783). The
record supports that Local 639 both
knowingly tolerated Woodward's acts and
fully authorized Woodward to act. In
either case, the jury verdict against the
union comports with statutory requirements

and should be upheld.

Iil. JNOV ON ABUSES OF PROCESS AND
INTENTIONAL INTERFERENCE WITH CONTRACT

[8] The jury awarded a total of
$100,000 against Woodward and the Local for
intentional interference with a contract
between Yellow Bus and the Charles Smith
Jewish Day School ("JDS"). The district

court set aside this verdict, finding that

App. 60

ee ee Oe ie ee a a ee ere. a, . ee te

entsitesinnintien

Yellow Bus had failed to offer proof,

"clear or otherwise," of casual connection
between appellees' alleged conduct and the
decision by JDS to terminate the contract.

See Tuxedo Contractors, inc. v. Swindell-

Dressler Co., 613 F.2d 1159, 1160 (D.C.Cir.

1979) (complainant must prove "contract,
knowledge of contract, intentional
procurement of its breach by defendant, and
damages resulting from breach"). We agree
with the district court and uphold its
judgment notwithstanding the verdict.
‘Pirst, Yellow Bus offered no evidence
whatsoever of the Local's intent to procure
a breach of this particular contract.
Additionally, Yellow Bus completely failed
to establish any link between the damage
suffered during the strike aand_ the
subsequent cancellation of the JDS contract
over one year later. The two factors
precipitating the cancellation by JDS--

Yellow Bus' tax liabilities and inadequate

App. 61

service--had nothing to do with appellees'

activities. Yellow Bus' difficulties with
the IRS predated the Local's involvement
with the company. Abundant testimony
linked the company's poor performance to
lax employee discipline and the rapid
deterioration of the company's stock of
antiquated buses after the departure of its
only skilled mechanic in the fall of 1982.
A number of Yellow Bus" own witnesses
admitted that these difficulties were not
traceable to appellees' efforts or action.
Since appellants failed to offer the most
elementary evidence of any casual
connection between the cancellation and the
appellees’ malefaction, the motion for a
judgment notwithstanding the verdict was
appropriately granted.

[9, 10] Appellants' objection to the
grant of JNOV on abuse of process also has
no merit. To prevail on abuse of process,

a plaintiff must demonstrate that process

App. 62

is being used "to compel the party affected

by it to do some collateral th’ \g which he
could not legally and regularly be

compelled to do." Hall v. Hollywood Credit

Clothing Co., 147 A.2d 866, 868 (D.C.App.

1959); see also Jacobson v. Thrifty Papwr

Boxes, Inc., 230 A.2d 710, 711

(D.C.App.1967) (citing 1 Am.Jur.2d Abuse of

Process § 4 (1962)). Plaintiff must

demonstrate not only ulterior motive, but
success in achieving illegitimate ends with

resulting injury. Morowitz v. Marvel, 423

A.2G 196, 198 (D.C.App.1980) ("[I]n
addition to ulterior motive, one must
allege and prove that there has been a
perversion of the judicial process and
achievement of some end not contemplated in
the regular prosecution of the charge.");

see also Hall v. Hollywood Credit Clothing

Co... 147 A.2d at 868; McCarthy §v.

Kleindienst, 741 F.2d 1406, 1414

(D.C.Cir.1984).

App. 63

i ee ee

ae ne

EG eS et

Appellants’ abuse of process claim

fails because one of the alleged ulterior
aims is implausible, and the other was not
achieved. The appellants claimed that
Woodward sought to discover information
vital to his criminal defense and to coerce
the company to make labor concessions.
However, the fact that Woodward's lawyer
did not commence discovery until after
Woodward's criminal charges were dropped
conclusively discredits discovery as an
"ulterior motive.” As for the coercive
contract claim, Woodward responded to the
company's resistance by abandoning the
"collateral" demand that Yellow Bus agree
to sign a collective bargaining agreement
as a condition of settlement of Woodward's
lawsuit. He eventually agreed to drop the
action in exchange for $3,300. However,
even if Woodward had initially commenced
legal action to induce Yellow Bus to

acquiesce in his labor demands, appellants

App. 64

suffered no actionable injury because

Woodward did not accomplish - this

impermissible purpose. See Morowitz v.

Marvel, 423 A.2d at 198 "{W]jithout more,
[the] proffer that [defendant] filed [a
Claim] with the ulterior motive of coercing
settlement is deficient"). Moreover, the
procurement of an "ordinary" settlement
will not ground abuse of process; the
settlement must accomplish some outrageous
end and represent a "perversion" of the
judicial process. See _ Id. In sum,
plaintiffs have failed to make out
essential elements of their abduse of
process claim. The district court's
Gecision to set aside the jury award for

abuse of process was appropriate.

IV. RICO COMPLAINT
[11] In its original complaint,
Yellow Bus alleged the conduct of Woodward

and the Local violated 18 U.S.C. §§ 1962(c)

App. 65

and (d) of the Racketeer Influenced and

Corrupt Organizations Act and requested
treble damages under 18 y.S.c. § 1964(c).
Section 1962(c) makes it "unlawful for any
person employed by or associated with any
enterprise engaged in * * * interstate
commerce, to conduct or participate,
directly or indirectly, in the conduct of
such enterprise's affairs through a pattern
of racketeering activity." Section 1962(d)
prohibits any conspiracy to violate
subsection (c). Section 1961(1) and (5) of
the statute defines "racketeering activity”
to include acts or threats involving
murder, arson, and extortion punishable
under state law. A “pattern” of such
activity requires at least wo acts
occurring within ten years. 18 U.S.C. §
1961(5). The predicate acts which combine
to produce the pattern of illegal activity
must be marked by the factors of

"continuity plus relationship." S.Rep.No.

App. 66

617, 91st Cong. lst Sess. 158 (1969), U.S.
Code Cong. & Admin.News 1970, p.4007. See

also Sedima, S.P.R.L. v. Imrex Co., 473

U.S. 479, 496 n.14, 105 S.Ct. 3275, 3295 n.
14, 87 L.Ed.2d 346 (1985).

Yellow Bus listed ten predicate acts
allegedly performed by the Local and
Woodward in violation of D.C. and Maryland
laws punishing extortion, including threats
against property and threats of bodily
harm. A careful examination of the
pleadings reveals that five of the counts
involve violence against property or
persons unconnected with Yellow Bus or its
labor organizing effort. These allegations
are not properly part of Yellow Bus’ §
1962(c) RICO claim against appellees. Of
the snsninane counts, four allege direct
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concluded that the amended complaint would

fail to state a proper RICO claim because
the union's acts were not committed in the
conduct of Yellow Bus' affairs; rather,
Yellow Bus was merely the "setting" for the
union's activities. We disagree with the
district court's assessment of the
relationship between the bus company and
the Local's alleged conduct, and reject as
overly restrictive any interpretation of
the languages of § 1962{c) which would
necessitate a dismissal of the RICO claim
against the Local in this case.

Unlike "enterprise” and "pattern," the
terms "conduct, " "participate" and
"through” do not have statutory
definitions. The Act has been challenged
as unconstitutionally vague for this

reason. See United States v. Stofsky, 409

F.Supp. 609 (S.D.N.Y¥.1973). In rejecting
the vagueness argument the court in Stofsky

explained:

App. 82

es Pa le wr —— ss pes ett ee 6s dhe te bl san os 0 hit 4 3 ctert bees be TS Awe, Le 6 cb, et ae | tein | Mle P As ah FF | rw. i. 7” -_—_— ae A a a

[T]he statute does not define [the]

connection by distinguishing between
predicate acts which play a major
role or a minor role, or any role at
all in what might be seen as the
usual operation of the enterprise;
nor does it require tnat such acts be
in furtherance of the enterprise, as
defendants suggest it must.

In this Court's view, the statute
fails to state these requirements
because Congress did not intend to
require them in these terms. The
perversion of legitimate business may
take many forms. The goals of the
enterprise may themselves be
perverted. Or the legitimate goals
may be continued as a front for
unrelated criminal activity. Or the
criminal activity may be pursued by
some persons in direct conflict with

the legitimate goals, pursued by

App. 83

Sa
=

others. Or the criminal activity
may, indeed, be utilized to further
otherwise legitimate goals. No good
reason suggests itself as to why
Congress should want to cover some,
but not all of these forms; nor is
there any good reason why this court
should construe the statute to do so.
It plainly says that it places
criminal responsibility on both those
who conduct and those who
participate, directly or indirectly,
in the conduct of the affairs of the
enterprise, without regard to what
the enterprise was or was not about
at the time in question. This may be
broad, but it is not vague.

Id. at 613. Thus in Stofsky's view, the

"requisite nexus" between unlawful acts and.
enterprise activities was left undefined
"for the simple reason that no particular

degree of interrelationship is required."

App. 84

United States v. Field, 432 F. Supp. 55, 58

(S.D.N.¥.1977) (citing Stofsky).
Notwithstanding Stofsky's refusal to

Clarify the reach of § 1962(c), courts have
struggled to define the scope of behavior
chargeable under that section. Attempts
have been made to formalize the intuition
that § 1962(c) was not meant to punish
predicate activity which forms no part of
the ordinary affairs of the enterprise, and
is only incidentally related to its day-to-

day business. See, e.g., United States v.

Yonan, 623 F.Supp. 881, 883 (N.D.III.1985),

aff'd in part and rev'd in part, 800 F.2d

164 (7th Cir.1986) (seeking a test for
"association" and “participation” to
Gisqualify, for example, "robbing a bank
twice”). Some federal courts have required
that the defendant participate in the
"direction" or "management" of the
organization, or have fashioned other rules

to restrict the universe of relationships

App. 85

subject to 1962(c) liability. See, e.g.

Bennett v. Berg, 710 F.2d 1361, 1364 (8th

Cir.), cert. denied sub nom. Prudential

Ins. Co. v. Bennett, 464 U.S. 1008, 104

S.Ct. 527, 78 L.Ed.2d 710 (1983) ("[{SJome
participation in the operation or
management of the enterprise itself” is

ordinarily required); Bank of America v.

Touche Ross & Co., 782 F.2d 966, 970 (llth

Cir. 1986) (chargeable predicate acts must
be "helpful or necessary” to the operation

of the enterprise); United States v.

Ladmer, 429 F.Supp. 1231, 1244 (E.D.N.Y.
1977) (dismissing a RICO charge based on
unauthorized expenditure of union funds for
personal travel expenses because unrelated
to the enterprise's "“essent al” or “core”
function).

Other federal courts, however, merely
impose an open-ended requirement that the
predicate acts relate to, or have some

effect upon, the affairs of the enterprise.

App. 86

See, @.g., United States v. Welch, 656 F.2d

1039, 1060-62 (5th Cir. 1981, cert. denied

sub nom. Cashell v. United States, 456

U.S. 915, 102 S.Ct. 1767, 72 L.Ed.2d 173
(1982) .(holding that 1962(c} requires a
"sufficient nexus between the racketeering
activities and the affairs of the
enterprise” and rejecting the requirement
of “benefit” to the enterprise); United
States v. Carter, 721 F.2d 1514, 1525-27

(llth Cir.) cert. denied sub nom. Morris

v. United States, 469 U.S. 819, 105 S.Ct.

89, 83 L.Ed.2d 36 (1984) (allowing "proof
of effect on the common everyday affairs of

the enterprise”). In United States v.

Scotto, 641 F.2d 47, 54-55 (2d Cir.1980),

cert. denied, 452 U.S.961, 101 S.Ct. 3109,

69 L.Ed.2d 971 (1981), union officials were
accused of forgiving contract requirements
and steering business in exchange for
illegal payoffs. The court refused to

embrace the "core functions” formula of

App. 87

Ladmer, or the Berg requirement that the
conduct relate to the operation or
management of the enterprise. Citing with
approval to the district court decision in

United States v. Stofsky, the Scotto court
fashioned a two part test for “conducting
the activities of an enterprise,” holding
that the proper connection is established
when "l)one is enabled to commit the
predicate offenses solely by virtue of
[one's] position in the enterprise or
involvement in or control over the affairs
of the enterprise, or 2) the predicate
offenses are related to the activities of
that enterprise.” Id. at 54. The court
went on to note that "[sjimply committing
predicate acts which are unrelated to the
enterprise or one's position within it
would be insufficient.” Id. Another Court
of Appeals restated the Scotto test in
United States v. Cauble, 706 F.2d 1322 (5th

Cir. 1983), cert. denied, 465 U.S. 1005,

App. 88

104 S.Ct. 996, 79 L.Ed.2d 229 (1984),
finding the demands of § 1962(c) satisfied
when “the defendant's position in the
enterprise facilitated his commission of
the racketeering acts” and "the predicate
acts had some effect on the lawful

enterprise.” Id. at 1333; see also United

States v. Provenzano, 688 F.2d 194, 200 (3d

Cir.), cert. denied, 459 U.S. 1071, 103

S.Ct 492, 74 L.Ed.2d 634 (1982) (following
Scotto).

We decline to adopt a more restrictive
standard than that enunciated in Cauble and
Scotto. Section 1962(c) of RICO refers to
@irect as well as indirect participation in
the enterprise's affairs, and imposes no
requirement that participation be at the
management level oor relate to "core
functions." Moreover, Congress has
expressed its intention that RICO be
"liberally construed to effectuate its

remedial purposes.” Pub.L. No. 91-452 §

App. 89

:
S

904(a), 84 Stat. 947 (1969). The
inappropriateness of artificially
restricting the types of relationships
satisfying § 1962(c) is especially apparent
in cases of predicate acts committed by
enterprise "outsiders" rather than
"insiders". In such instance, a stringent
test threatens to frustrate RICO's broad

remedial purpose. See United States v.

Elliott, 571 F.2d 880, 903 (5th Cir.),

cert. denied sub nom. Delph v. United

States, 439 U.S. 953, 99 S.Ct. 349, 58
L.Ed.2d 344 (1978) ("The substantive
proscriptions of the RICO statute apply to

insiders and outsiders--those merely

‘associated with' an enterprise--who

participate directly and indirectly in the

enterprise's affairs. [Citations omitted. ]
Thus the RICO net is woven tightly to catch
even the smallest fish, those peripherally
involved with the enterprise.”).

Mindful of these flexible terms, a

App. 90

number of courts have permitted RICO
actions in bribery cases against those
seeking to influence organizations in which
they hold no official position of

authority. See, e.g. United States v.

Forsythe, 560 F.2d 1127, 1136 (3d Cir.1977)

(reversing a lower court holding that a
magistrate who accepts bribes from a
bonding company is not’ sufficiently
"associated with" the bonding company

enterprise's affairs); see also United

States v. Bright, 630 F.2d 804, 830 (5th

Cir. 1980) (holding that bribing and
influencing a sheriff qualified as
participation in the affairs of the

sheriff's office); United States v. Lee

Stoller Enterprises, 652 F.2d 1313, 1320-21

(7th Cir.), cert. denied, 454 U.S. 1082,

102 $.Ct. 6%, 70 L.Ed.2a@ 615 (1981)
(businessman paying kickbacks to sheriff in
exchange for lucrative contracts held to

participate in sheriff's office affairs);

App. 91

United States v. Blackwood, 768 F.2d 131,

137-38 (7th Cir.), cert. denied 474 U.S.

1020, 106 S.Ct. 569, 88 L.Ed.2d 554 (1985)
(applying Cauble to allow § 1962(c) RICO
charge against a police officer charged
with soliciting bribes to influence county

court case disposition); United States v.

Yonan, 800 F.2d 164, 167 (7th Cir. 1986)

cert. denied, 479 U.S. 1055, 107 S.Ct. 930,

93 L.Ed.2d 981 (1987) (reversing the
dismissal of a RICO count against a
criminal defense attorney charged with
bribing a state district attorney).

The Yonan court stressed that
Gefendant need not have a stake or ongoing
interest in the enterprise, nor any direct
contact with managers of the enterprise, as
long as predicate acts formed part of a
"business relationship.” Id. at 168. In
a context not involving official

corruption, the court in State of New York

v. O'Hara, 652 F.Supp. 1049, 1053-54

App. 92

(W.D.N.Y¥.1987), applied the analysis in
Yonan to uphold a RICO claim against a
private contractor who allegedly submitted
fraudulent bids on a municipal waste clean-
up contract. The court held that this
activity fulfilled the statutory
requirement of association with the city of
Niagara Falls through indirect

participation in its affairs. See also

United States v. Starnes, 644 F.2d 673, 679

(7th Cir.), cert. denied, 454 U.S. 826, 102

S.Ct. 116, 70 L.Ed.2d 101 (1981) (arsonist
hired by company official to “torch” its
headquarters "associates with" and
"participates" in the company's affairs
under § 1962(c)).

[14] The alleged relationship between
the Local and Yellow Bus falls well within
the scope of activity contemplated by the
words of the statute, and meets’ the
appropriately minimal requirements set out

in Scotto, Cauble, and Yonan and their

App. 93

progeny. As in Yonan, Yellow Bus and the
union had a full-fledged "business
relationship"--Yellow Bus was not merely a
“setting” for crimes otherwise unrelated to
the company's affairs. As we have shown,
it matters not that Woodward and the Local
did not direct or manage the "core" day-to-
day transportation activities of Yellow
Bus, or that the union initially exerted
its influence over the conduct of
employees, rather than management. A
strike for recognition of the union as a
collective bargaining representative is an
activity sufficiently related to the
company's ongoing role as a business
enterprise and employer to establish the
requisite nexus. Although the Local and
the bus company were associated for a
limited period, their relationship had
vital significance for the economic destiny
of Yellow Bus. The elaborate iegal

structure which governs all aspects of

App. 94

management-labor interaction only serves to
emphasize that a strike by a union seeking
to bargain with an employer is an important
"affair" of the employer company. More
often than not, it is a momentous event in
the life of that enterprise.

Having established that the strike and
organizational effort were "affairs" of
Yellow Bus, we must decide whether
appellees’ actions, if proved, would amount
to participation in the conduct of those
affairs “through a pattern of racketeering
activity.” Yellow Bus alleges that the
violence was committed with the intent to
influence the company's conduct.
Allegations of a requisite number of
intentional destructive acts or threats
Guring the strike would alone satisfy the
participation requirement for the purpose
of stating a RICO claim. Any further
showing of success in influencing concrete

company choices through violent extortion

App. 95

7.

is unnecessary. In contending that
appellees chose to avail themselves of
violent tactics as one way of conducting
the strike, Yellow Bus charges that
appellees participated in the conduct of
the company's affairs for the duration of
the strike by means of these activities,
among others. This clearly serves to
fulfill the requirement of participation in
the affairs of the company.

In Northwestern, the Court reaffirmed

its postulate that RICO could not be given
@ narrow construction in light of the
language and legislative history of the

Act, Sedima, S.P.R.L. v. Imrex Co., 473

U.S. 479, 105 S.Ct. 3275, 87 L.Ed.2d 346
(1985), and then addressed the nettlesome
problems of "developing a meaningful
concept of ‘pattern’ within the existing
statutory framework...." -- U.S. at --, 109
S.Ct. at 2899. the Court emphasized that

RICO does not require separate illegal

App. 96

==: -. ="
’ Ive oe eee

schemes to constitute a "pattern"; nor is
the statutory requirement established
"merely by providing two predicate
acts...." Id. Instead, the Court recalled
the legislative history that it had noted
in Sedima, and concluded that "'[i]t is

this pattern of continuity plus

relationship which combines to produce a

pattern.'" Id. -- U.S. at --, 109 S.Ct. at
2900 (quoting S.Rep. No. 617, 91st Cong.,
lst Sess. 158 (1969), U.S. Code Cong. &
Admin. News 1970, p.4007 (emphasis added).
The Court determined that, in summary,
"RICO's legislative history reveals
Congress' intent that to prove a pattern of
racketeering activity a plaintiff ... must
show that the racketeering predicates are
related, and that they amount to or pose a
threat of continued criminal activity."

Northwestern, -- U.S. at --, 109 S.Ct. at

2899.

As previously stated, there is little

App. 97

te be urged against the “relatedness” of
the predicate acts alleged by appellant.
While the “continuity” of the alleged

predicate acts is a closer question because

of the relatively short duration of the

strike, these acts could, if proved,

establish “a distinct threat of long term

racketeering activity, either explicit or

implicit. od Id. --U.S. at--, 109 S.Ct. at

2902. In any event, the cause cannot be

pretermitted at the stage that the District

Court determined. At least until

appellants have an opportunity to amend and

are put to proof, the RICO count cannot be

terminated.

V. RULE 15(A) LEAVE TO AMEND

[15] ‘Finally, we hold that the
district court abused its discretion to the
extent that it relied on lack of timeliness
to justify its refusal to grant leave to
amend. Fed.R. Civ.P. 15(a) declares that

leave to amend "shall be freely given when

App. 98

justice so requires.” As the Supreme Court

forcefully states in Foman v. Davis, 371

U.S. 178, 182, 83 S.ct. 227, 230, 9 L.Ed.2d
222 (1962), “this mandate is to be heeded.”
These pleading rules were designed to
facilitate a proper decision on the merits,
and the opportunity to test the merits
should ordinarily be accommodated if
injustice will not otherwise result. See

generally 6 C. Wright & A. Miller, Federal

Practice and Procedure § 1484 (1971).

The reason recognized as justifying
Genial of motion to amend--"undue delay,
bad faith or dilatory motive * * *,
repeated failure to cure deficiencies * *
*, undue prejudice to the opposing party *
* *, futility of the amendment,” 371 U.S.
at 182, 83, S.Ct. at 230--are not
applicable here. Only two months elapsed
between the March 31, 1984 hearing at which
the court first expressed doubts about the

deficiencies of the original pleading and

App. 99

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Yellow Bus’ request to amend those
Pleadings. When the court ruled in late
June on the Local's April 13 motion to
Gismiss the original RICO claim against the
union, commencement of trial was still over
eight months away. Consideration of this
timetable indicates that Yellow Bus moved
with more than reasonable alacrity to
correct its pleadings, and that ample time
was available to defendants for trial
preparation. Amendment of the complaint,
in any event, would not have imposed any
additional burdens on the Local because the
restated RICO claim required consideration
of no new facts and arguments. Since there
was no evidence of prejudice to appellees
or of deliberate delay or bad faith, leave
to amend was appropriate and should have
been granted.
CONCLUSION
We remand to the district court for a

trial on the RICO charges after Yellow Bus

App. 100

Se tlt ll Mi cl dle le ai i ea eee a ke. se hae » 4 ee ee hs ee * “- OE 20 OO ea ee sae ee

has had the opportunity to lodge revised
pleadings. We also reinstate the judgment
against the Local for malicious destruction
of property. After considering the
remaining contentions on appeal, we find
them to be without merit. Accordingly, the
judgment of the district court is affirmed
in part and reversed in part, and the case
is remanded to the district court for
further proceedings.

HARRY T. EDWARDS, Circuit Judge,
concurring:

I have nagging doubts about our
holding that "the strike and organizational
effort were ‘affairs' of Yellow bus,” maj.
op. at 144, and that, consequently,
plaintiff might be able to state a cause of
action under section 1962(c) of RICO. This
result seems strangely at odds with certain
fundamental precepts of labor law and
collective bargaining. However, I

recognize that this holding finds support

App. 101

in the case law, and that it is not
inconsistent with RICO's broad remedial
purpose. I therefore concur, albeit with

pause.

App. 102

yt

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James F. WOODWARD, Plaintiff,
v.
Michael DIPALERMO, et al.,
Defendants.
YELLOW BUS LINES, INC., et
al., Plaintiffs,
v.
DRIVERS, CHAUFFEURS &
HELPERS, LOCAL UNION
639, ET AL., Defendants.

Civ. A. Nos. 82-3154, 83-1232.
United States District Court
District of Columbia
Jan. 16, 1986.

Thomas G. Corcoran, Jr., Washington,
D.C., for Plaintiff.

Hugh J. Beins, John R. Mooney, Beins,
Axelrod and Osborne, Washington, D.C., for
defendants.

MEMORANDUM

FLANNERY, District Judge.

In this case, a jury returned a

App. 103

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verdict in favor of plaintiffs on three
counts: malicious destruction of property,
intentional interference with contractual
relations, and abuse of process. In
response to a special verdict form, the
jury awarded damages of approximately
$56,000 against defendant James Woodward
and approximately $77,000 against defendant
union. This matter now comes before the
court on defendants’ motion for judgment
notwithstanding the verdict, or
alternatively, for modification of the
judgment or a new trial. Because the
verdicts are obviously against the clear
weight of the evidence on the counts
alleging irtentional interference with
contractual relations and abuse of process,
the court will set aside the jury verdicts
in favor of plaintiffs on those counts, and
enter judgments notwithstanding the
verdicts in favor of the defendants. On

the count alleging malicious destruction of

App. 104

property, the court will modify the
verdict.
I. Background

Plaintiff Yellow Bus Lines Inc.
("Yellow Bus") was a Virginia corporation
located in the District of Columbia and
engaged in providing bus service for
schools. In November of 1981, some eight
employees of Yellow Bus’ struck for
recognition of defendant Drivers,
Chauffeurs & Helpers Local Union 639
("Local 639"). Defendant Woodward was the
Local 639 representative who sought to
organize the employees and to establish
Local 639 as their collective bargaining
representative.

Though the company continued to
operate throughout a four-day strike in
' November of 1981, plaintiffs contended that
Local 639 and Woodward engaged in a
systematic campaign to undermine’ the

company. This was allegedly done dur’ng

App. 105

the strike by encouraging employees to

commit various acts of vandalism and after
the strike by instructing the employees to
damage property and be late or absent.
Plaintiffs alleged that Woodward threatened
Yellow Bus managers that if Yellow Bus
resisted unionization, then litigation and
other tactics would be used to hurt Yellow
Bus. The labor dispute continued after the
strike, and in the summer of 1983, Yellow
Bus discontinued most of its operations,
alleging that defendants’ activities caused
its demise.

Proceedings in this court’ were
initiated on November 4, 1982, when
Woodward filed a suit alleging false arrest
against D.C. police officer Michael
Dipalermo, the District of Columbia, and
Yellow Bus. Plaintiffs counterclaimed with
federal and state claims in April of 1983
against Woodward and Local 639. By October

1984, this court had dismissed all of the

App. 106

ee ee se ee es oe eT eee eS

federal claims, but elected to retain
jurisdiction over the state claims. In May
of 1984, Woodward's claim for false arrest
was settled with the District of Columbia
and was dismissed against Yellow Bus on
Woodward's motion to dismiss.

On February 18, 1985, trial commenced
on the remaining claims. On March 8, 1985,
a verdict was returned in favor of
plaintiffs on three counts. Defendants now
contend that notwithstanding the jury's
verdict, judgment should be _ granted
defendants because there was insufficient
proof on each count.

Judgment notwithstanding the verdict
should be entered when "the evidence,
together with all inferences that can
reasonably be drawn therefrom, is so one-
sided that reasonable men could not

Gisagree on the verdict.” Coburn v. Pan

American World Airways, Inc., 711 F.2d 339,

342 (D.C.Cir.1983). Of course, only when

App. 107

the probative facts are undisputed and
reasonable minds can draw but one inference
does the question become one of law for the

court. Aylor v. Intercounty Constr. Corp.,

381 F.2d 930, 934 (U.S.App.D.C. 1967). An
additional element in the standard of
review exists in this case: by federal
law, no union, agent or member of a union
shall be heid liable in any court for the
unlawful acts of individual officers or
members except upon “clear proof of actuai
participation in, or actual authorization
of, such acts...." 29 U.S.C. § 106 (1982).

The counts and the evidence supporting
them are each discussed separately.

II. Interference with Business Contract

{1} The largest portion of the jury's
award (cumulatively $100,000) was based on
a finding that defendants intentionally
interfered with the 1982-83 contract
between Yellow Bus and the Charies Smith

Jewish Day School ("JDS"). In order to

App. 108

prevail on this claim, there must be clear
proof of a specific intent to procure the
breach of a specific contract thereby
causing a specific and ascertainable

injury. Tuxedo Contractors, Inc. v.

Swindell-Dressler Co., 613 F.2d 1159

(D.C.Cir.1979).

[2] The only specific contract
mentioned at trial was between Yellow Bus
and JDS, which was entered into in October
of 1982. The Chairman of the JDS
Transportation Committee, Howard Wilchins,
testified without impeachment that JDS'‘s
difficulties with Yellow Bus occurred
almost one year after the strike, after the
contract was negotiated in October of 1982.
Transcript, at 1507, 1508. It was in
January of 1983 that JDS took action to
curtail the contract because of Yellow Bus'
poor service. Transcript, at 1509. But
even then the contract continued. It was

only when the president and route manager

App. 109

of Yellow Bus, Paula Westgate, informed JDS
of Yellow Bus' financial problems with the
IRS that Wilchins terminated the contract.
Transcript, at 1511; Defendants’ Exhibit
22.

This court finds that there is no
proof, clear or otherwise, of a causal
connection between defendants alleged
conduct and the termination of the
contract. The two reasons for termination
of the contract were Yellow Bus' poor
performance and its difficulty with the
IRS. Transcript, at 921, 1513. Neither cf
these arose from defendants' activities.
The plaintiffs also had to prove that
defendants intentionally produced a breach
of the contract, yet there was no evidence
supporting this element.

While driver attendance may have been
a problem, Paula Westgate admitted at trial
that defendants were not responsible for

the problems of an overwhelming majority of

App. 110

drivers. In fact, all of plaintiffs'
witnesses admitted that they had no proof
of defendants' responsibility for any of
the drivers' absenteeism, tardiness, or
maintenance problems. Rather, the evidence
showed that the company had significant
drug and alcohol problems, and had internal
problems among the three owners: Paula
Westgate, Maria Triggs (secretary-treasurer
and office manager), and Peter McKinnon
(vice president and company mechanic). In
fact, McKinnon at one point attempted to
Gestroy the company, declared he was
Christ, and threatened to murder Westgate,
his sister. Moreover, no evidence was
introduced at trial that any of the
vandalism occurred after the allegedly
affected contract was executed.

There was also no evidence that
defendants were responsible for the
company's tax liabilities. Maria Triggs

testified that the company had difficulty

App. 111

paying its taxes from its inceptior.. The
obligations stemmed from the company's
withholding FICA and social security
deductions from employees, but then not
remitting the deducted amounts to the
federal government. This practice began
June of 1981, before the union ever started
negotiating with Yellow Bus.

The evidence pointed to a different
cause for Yellow Bus' poor performance
after the execution of the 1982-83 contract
with JDS: the deterioration of the buses.
Transcript, at 1110-1111, 1°99. That
deterioration came about from the age of
the buses: Yellow Bus never bought a new
bus and every model was a 1971 or earlier
model. Transcript at 578-579, 586-587. By
January 1983, half of the buses owned by
Yellow Bus were inoperable. Transcript, at
361. After McKinnon departed in the fall
of 1982 there was no one skilled ehough to

keep the buses running. Transcript, at

App. 112

1111. This was when JDS sent several
complaints to Yellow Bus. Transcript, at
234. In January of 1983, the school
reduced the number of Yellow Bus routes,
Transcript, at 1508-09, but the school
intended to continue its contractual
relationship with Yellow Bus. Transcript,
at 1510. Only when JDS learned of Yellow
Bus' tax liability to the IRS did JDS
terminate the Yellow Bus’ contract.
Transcript, at 1511-13, 1137, and 938.
Finally, there was no clear proof of
the damages suffered as a consequence of
the alleged interference. The award of
$100,000 is not supported by any specific
evidence in the record; this’ single
contract could not have generated such
profits. First, it only generated
approximately $2,232 of gross income per
day for a term of 183 school days per year.
Second, the contract was totally performed

for the first five months and there was 80%

App. 113

3 ts be
ee ea ee ee! Vee ee eA ee ee. a

performance for the next two months.
Defendants’ Exhibit 21. This only leaves
lost profits from two routes for two months
(grossing approximately $10,400) and all
routes for two months (grossing
approximately $49,250). After subtracting
cost of performance, this leaves a figure
nowhere near $100,000.

Plaintiffs respond that Triggs and
Westgate's testimony, supported by the
company's tax returns, showed that the
company's profits went from approximately
$3,000 the first year to approximately
$20,000 the second year. Though the buses
were old, the company almost tripled its
business from 1979 to 1981. After the
strike, absenteeism increased due to the
union activity. Plaintiffs' Exhibit 19(a).
That increase led to losses of $128,517.
Plaintiffs' Exhibits 17 and 19(d). Even if
this were so, such damages are not tied to

the contract in issue for 1982-83, and

App. 114

therefore cannot be used to determine
compensation on that count.

Thus, plaintiffs have failed to show
intentional procurement of a breach since
they failed to demonstrate that defendants'
actions contributed in any way to JDS's
decision to terminate the contract.
Further, plaintiff's evidence provided an
inadequate showing of damages from the
breach. Therefore, this court must set
aside the verdict on this count and grant
judgment to defendants.

III. Abuse of Process

[3] To prove abuse of process,
plaintiffs had to show: (1) the issuance
of legal process; (2) an ulterior purpose;
(3) an improper act in the use of process;

and (4) actual injury. Jacobson v. Thrifty

Paper Boxes, Inc., 230 A.2d 710, 711

(D.C.App.1967).
[4] Element (1) was not in dispute.

With regard to elements (2) and (3),

App. 115

plaintiffs alleged that Woodward filed his
lawsuit to gain information pertaining to
his impending criminal trial and that
Woodward offered to withdraw the suit if
the company would pay its drivers five
dollars per hour. In this’ action,
plaintiffs' burden was to show by clear
proof that Woodward's suit against
plaintiffs resulted in a perversion of the
judicial process and achieved some end not
regularly contemplated by the law.
Morowitz v. Marvel, 423 A.2d 196, 198

(D.C.1980). Such perversion requires a
gross deviation from what is considered

acceptable by the community. Epps v.

Vogel, 454 A.2d 320, 324 (D.C.App. 1982).

[5] This court finds that no
reasonavlle trier could find on this
evidence that an abuse of process occurred.
Woodward testified without contradiction
that his attorney alone made the decisions

as to when and how to pursue discovery in

App. 116

Woodward's case. The discovery never
actually occurred, at plaintiffs' request,
until after the criminal case was
dismissed. Sufficient evidence came out at
trial regarding the peculiarities of
Woodward's arrest which refute any finding
of “perversion” in the filing of his suit.
In Woodward's civil suit for false arrest,
co-defendants with Yellow Bus settled the
case for more than three thousand dollars
($3,000). This is further proof that there
was no basis for a jury finding that
Woodward's filing of his civil suit
resulted in a perversion of the judicial
process.

IV. Malicious Destruction of Property

{6] To find malicious destruction of
property, the jury had to find clear proof
-that: (1) it was defendants that destroyed
the property; (2) it was not the property
of the defendants; (3) defendants destroyed

the property maiiciously; and (4) the

App. 117

property destroyed had some value. Nichols
v. United States, 343 A.2d 336, 341

(D.C.App. 1975).

{[7, 8] The jury found that these
elements had been met and so awarded to
Yellow Bus $1,280 against Woodward and
$1,920 against Local 639. During the four-
day strike in November of 1981, there was
sufficient evidence to find defendant
Woodward liable for damages sustained
during that four-day period. There was
circumstantial evidence linking Woodward to
the various items introduced into evidence,
such as rocks, strips of wood and a curtain
rod both with nails protruding, and a beer
can with nails in it. These items of
physical evidence coupled with the threats
by Woodward and other strikers made in
Woodward's presence provide a sufficient
evidentiary basis for the jury to hold
Woodward responsible for the damages

sustained during the period of the four-day

App. 118

strike. The plaintiffs failed, however to
provide clear proof that Local 639 was
implicated in any way in the destruction of
the property or that it ratified Woodward's
actions in any manner. Therefore, the
judgement against Local 639 must be set
aside. Defendant Woodward's motion to set
aside the verdict against Woodward on the
count will be denied.

Judgement will be entered in
accordance with the foregoing.

JUDGMENT

After consideration of defendants'
motion for judgment notwithstanding the
verdict, or alternatively, for modification
of the judgment or for a new trial, the
opposition thereto, and the entire record
herein, it is, by the court, this 16th day
of January, 1986,

ORDERED, ADJUDGED, and DECREED that
the motion for judgment notwithstanding the

verdict is granted with regard to defendant

App. 119

Se te he ite

hee ee Me AE ee A ORs eet Os

Drivers, Chauffeurs & Helpers Local Union
639 and judgment is entered in favor of
defendant Drivers, Chauffeurs & Helpers
Local Union 639 on all counts; and it is
further

ORDERED, ADJUDGED, and DECREED that
the motion for judgment notwithstanding the
verdict is granted with regard to defendant
James Woodward on the counts of tortious
interference with contractual relations and
abuse of process, and judgment is entered
in favor of James Woodward on those counts;
and it is further

ORDERED, ADJUDGED, and DECREED that
the motion for judgment notwithstanding the
verdict is denied with regard to defendant
James Woodward on the count of malicious
destruction of property, as is defendants'
alternative motion for modification of the
judgment or for a new trial; and it is
further

ORDERED, ADJUDGED and DECREED that

App. 120

REE LO SkE LT, Vee a ii

judgment be entered in favor of Yellow Bus
Lines, Inc. against James Woodward in the

amount of $1,280.00.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_3196%3A1. Public record. Not legal advice.