# Appendix — United Steelworkers of America v. Cox (No. 94-724)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1994

## Text

‘y) FILED.

~94 724 OCT 21 19%

NO.———oFFICE OF THE CLERK

IN THE
Supreme Court of the United States
~ OcToBer TERM, 1994

UNITED STEELWORKERS OF AMERICA,
Petitioner,
Vv.

Leste Ray Cox, et al.,
Respondents.

Petition for Writ of Certiorari to the
United States Court of Appeals
for the Eleventh Circuit

APPENDIX TO
PETITION FOR WRIT OF CERTIORARI

CARL B. FRANKEL ROBERT M. WEINBERG *
United Steelworkers JEREMIAH A. COLLINS

of America PAGE KENNEDY
Five Gateway Center BREDHOFF & KAISER
Pittsburgh, PA 15222 1000 Connecticut Ave., N.W.
JosePH R. WHATLEY, JR. Suite 1800

Cooper, MITCH, CRAWFORD, Washington, D.C. 20086
KUYKENDALL & Wuatiey = (202) 838-9840
505 N. 20th Street * Counsel of Record

WILSON - Eras Pairing Co., Inc. - 789-0086 - WasniIneTOoN, D.C. 20001

@ A. \G?

TABLE OF CONTENTS
Page

A. Opinion of the United States Court of Appeals for
the Eleventh Circuit, dated April 5, 1994 _.......... la

B. Opinion and Order of the United States District
Court for the Northern District of Alabama,
Southern Division, dated December 16, 1991........ 72a

C. Opinion and Order of the United States District
Court for the Northern District of Alabama,
Southern Division, dated February 18, 1992........ 153a

D. Final Judgment as to Fewer Than All Claims of
the United States District Court for the Northern
District of Alabama, Southern Division, dated
eh RIG gece IT ETS MT Ct se 16la

E. Opinion of the United States Court of Appeals for
the Eleventh Circuit on Petitions for Rehearing
and Suggestions for Rehearing En Banc, dated
PE NUE « SUITED oncacandhdalehictirsiccbhitanghtindchinundaondwasemsickinarese 162a

ee

la
APPENDIX A

: UNITED STATES COURT OF APPEALS
ELEVENTH CIRCUIT

Nos. 91-7215, 92-6218

LESLIE Ray Cox; R.M. Cox; Larry DRIVER; BARRY
NICHOLS; JOHN BULLARD; ROBERT W. KENNEDY, JR.;
LoRENZO G. EasT; CLARENCE M. Pope, Jr.; C.R.
ALTEsS; JACK E. MERRYMON; TERRY P. WEST; R.S.
ARNOLD; M.W. MILSTEAD; J.W. WADE; MANNING
A.C. SNIDER; TERRY H. MELVIN; THomMas E. HILL;
Gary D. SWANN; RONALD E. FRAZIER; ANTHONY J.
CRAPET; ROBERT M. GREEN; HEATH L. MCMEANs,
Ill; BrLLy CARTER; Joz A. KNIGHT; GEORGE BOGLIN,
WARDELL CLARK, PHILLIP L. DRUMMOND, Don L.
FLuRRY, DENNIS R. FULTON, DENNIS E. JoNEs, W.T.
MAYBERRY, JAMES R. MILLER, WILLIE J. NATION,
OscaR LEE PERRY, ROBERT POOLE, BRACK WELLS,
WILLIE YOUNG, HARRY S. TURNER,

Plaintiffs-A ppellees,
Cross-A ppellants,
Vv.

ADMINISTRATOR UNITED STATES STEEL & CARNEGIE
and UNITED STEEL & CARNEGIE PENSION FUND,
Defendants,

UNITED STEELWORKERS OF AMERICA, AFL-CIO-CLC
and USX CorPorATIon, a/k/a
UNITED STATES STEEL CORPORATION,
Defendants-A ppellants,
Cross-A ppellees.

2a

LESLIE Ray Cox, R.M. Cox, Larry DRIVER, BARRY
NICHOLS, JOHN BULLARD, ROBERT W. KENNEDY, JR.,
LORENZO G. EAST, CLARENCE M. PopgE, C.R. ATLES,
JACK E. MERRYMON, TERRY P. WEST, R.S. ARNOLD,
M.W. MILSTEAD, J.W. WADE, A.C. SNIDER, TERRY H.
MELVIN, THOMAS E. HILL, GAry D. SWANN, RONALD
E. FRAZIER, ANTHONY J. CRAPET, ROBERT M. GREEN,
HEATH L. McMegans, III, BrLty CARTER, JoE A.
KNIGHT, GEORGE BOGLIN, WARDELL CLARK, PHILLIP
L. DRUMMOND, Don L. FLuRRY, DENNIS R. FULTON,
DENNIS E. JONES, W.T. MAYBERRY, JAMES R. MILLER,
WILLIE J. NATION, OSCAR LEE PERRY, ROBERT POOLE,
BRACK WELLS, WILLIE YOUNG, HARRY S. TURNER,

Plaintiffs-A ppellants,

V.

ADMINISTRATOR UNITED STATES STEEL & CARNEGIE,
UNITED STATES STEEL & CARNEGIE PENSION FUND,
USX CORPORATION, a/k/a UNITED STATES STEEL
CORPORATION,

Defendants-A ppellees.

Appeals from the United States District Court
for the Northern District of Alabama

April 5, 1994

Before ANDERSON and CARNES, Circuit Judges,
and SCHLESINGER’*, District Judge.

* Honorable Harvey E. Schlesinger, U.S. District Judge for the
Middle District of Florida, sitting by designation.

3a
CARNES, Circuit Judge:

This case arises out of the negotiations between the
USX Corporation (“USX” or “the Company”), formerly
known as United States Steel, and the United Steelwork-
ers of America (‘the Union’) leading to the 1983 Col-
lective Bargaining Agreement governing operations at the
USX steel mill in Fairfield, Alabama (“the Fairfield
Works”). The plaintiffs-appellees, who are or were Union
members and employees at the Fairfield Works, brought
this suit against USX, the administrator of the United
States Steel and Carnegie Pension Fund (“the Fund”),
and the Union, alleging that the Union negotiators Cco-
vertly requested and received pension benefits from the
Company to which they were not entitled and that, as a
result, the Union negotiators agreed to concessions that
damaged the plaintiffs. The district court granted sum-
mary judgment to the defendants on several of the plain-
tiffs’ claims, and certified its decision for appeal. We re-
view that decision, along with several of the court’s rul-
ings on discovery matters.

In part I, we discuss the facts and prior proceedings
of the case as background. In part II, we review the
district court’s grant of summary judgment for the de-
fendants and explain why we reverse that ruling. More
specifically, we discuss the standard of review in subpart
A, then we analyze the plaintiffs’ RICO claim in subpart
B and, in subpart C, their breach of contract claim
against USX under § 301 of the Labor Management Re-
lations Act, 29 U.S.C.A. § 185 (1978 & Supp.1993). In
part III, we review various rulings of the district court on
discovery. After explaining in part IV our lack of juris-
diction to review the district court’s decision not to cer-
tify a plaintiff class as to the claim for equitable relief,
we conclude in part V.

4a

I. BACKGROUND

The Fairfield Works steel mill in Jefferson County,
Alabama, had been closed, and its approximately 2,600
employees laid off, for over a year when, in September
1983, USX and the Union sought to reach an agreement
under which the mill could be reopened. William Miller,
USX Vice President for Labor Relations, headed the
USX negotiating team. The Union was represented by
Thermon Phillips, a member of the Union’s International
Executive Board and Director of District 36 (which in-
cludes Alabama) and by E.B. Rich, a sub-director of
District 36. Both Phillips and Rich had left USX to work
for the Union years before; neither had been with the
Company long enough to qualify for a pension.

The plaintiffs allege that shortly after the negotiations
began, Rich took Miller aside and gave him a note de-
manding that the Company grant retroactive leaves of
absence to a few specified Union representatives (includ-
ing themselves), so that the years they had spent working
for the Union would be counted for pension purposes as
years spent with USX and they would therefore become
eligible for USX pensions. According to the plaintiffs,
the Union negotiators surreptitiously informed Miller that
their agreement to any concessions at Fairfield was condi-
tioned on their receiving Company pensions.

The final Fairfield Works Agreement (“the Agreement”
or “FWA”), reached on Christmas Eve, 1983, did in-
clude sizable concessions, although the Union argues that
USX acceded to numerous Union demands before the
Agreement was reached, and USX argues that in return
for Union concessions it committed itself to making sub-
stantial capital investments to modernize the mill. Under
the Agreement, more than 500 jobs were eliminated;
local working conditions rules (governing such matters as
job assignments and crew sizes) were abolished alto-
gether, giving the Company sole discretion in determining
job assignments; all pending complaints, grievances, and

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arbitration cases were dismissed; maintenance and jani-
torial jobs were contracted out; and salary guarantees and
certain types of incentive pay were dropped. Towards the
end of the negotiations, one USX official estimated that
the Agreement would yield savings of 23.5 million dollars
per year. The plaintiffs assert that Rich and Phillips re-
fused to sign the final agreement until USX covertly
agreed to their pension demands. Miller testified in depo-
sition that the Union negotiators signed the Agreement
after he told them that he was under the impression that
their pension request “would be considered favorably”

but that he “could not assure them of that.”

In 1984, after the Agreement went into effect, Rich
contacted USX numerous times to inquire about the status
of the pension request. In the fall of 1984, the USX
Corporate Policy Committee approved a unilateral change
in policy to allow approval of indefinite retroactive leaves
of absence for former employees who had left to work for
the Union. J. Bruce Johnston, Executive Vice President
of Employee Relations, proposed the change, writing to
the Committee that “it is in the Company's interest to
foster and promote the goodwill of former employees who
were granted leaves of absence to work for the [Union].”
Shortly thereafter, the Company approved pensions for
six of the Union officials that Rich had named during
the negotiations (referred to by some as the “Fairfield
Six”), including Rich and Phillips themselves." Thus,
Rich and Phillips received for themselves and for others
that which they had covertly demanded during the nego-
tiations. In November 1984, USX began paying the Fair-
field Six their pensions, which were awarded retroactively
to February 29 of that year. However, USX did not di-
rectly inform the potential beneficiaries, other than the
Fairfield Six, of the change in its leave-of-absence policy.
In March 1985, Johnston did write a letter to Union

1 The other members of the Fairfield Six are Ralph Gurley, Carl
Statum, Virgil Pearson, and Fred Shepard.

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president Lynn Williams, informing him that “United
States Steel’s procedure was revised so that Leaves of
Absence applied for by International Union Representa-
tives may be permitted for longer periods than those es-
tablished in the Labor Agreement, in designated circum-
stances, at the discretion of the Company on a case-by-
case basis.” The letter also stated that, “[p]ursuant to the
above policy, we have approved requests for Leaves for
six (6) International Union Representatives.” The Union
apparently did not inform any of its other representatives
or members of the change in policy, so that the Fairfield
Six were the only ones who received pensions under the
new policy.

In May 1988, after several other Union representatives
heard rumors of the benefits the Fairfield Six were receiv-
ing, and applied for similar pensions, the United States
Steel Fund sent a letter to the Fairfield Six informing
them that it would begin depositing their benefits into
escrow accounts. According to the letter, recent decisions
by the Second, Third, and Fifth Circuits “raised serious
challenges concerning the legality of approving special,
retroactive leaves of absence which enable union officials
to receive credit for pension purposes for extended pe-
riods they spend in the service of the Union.” The letter
explained that “in light of current legal developments,”
continued payment of the benefits could subject the Fair-
field Six, USX, and the Fund “to criminal liability.”

In 1990, as a result of their actions concerning the
negotiations and pensions, USX, Rich, and Phillips were
convicted of violating 29 U.S.C.A. § 186 (1978 & Supp.
1993). Subsection (a) of that statute prohibits “any
employer” from paying, lending, or delivering “any money
or thing of value” to “any representative of any of his
employees who are employed in an industry affecting
commerce.” 29 U.S.C.A. § 186(a)(1) (1978 & Supp.
1993). Subsection (b) makes it “unlawful for any person
to request, demand, receive, or accept, or agree to receive
or accept, any payment, loan, or delivery of any money

Ja

or other things of value prohibited by subsection (a) of
this section.” 29 U.S.C.A. § 186(b)(1) (1978 & Supp.
1993). The appeal of those convictions is pending before
this Court.

Thirty-eight present and former USX employees brought
this suit in the Northern District of Alabama, seeking
monetary damages and equitable and declaratory relief
for a class of similarly situated workers. The final
amended complaint asserted five claims against USX, the
Fund, and the Union. Count One alleged that the defend-
ants violated the Racketeer Influenced and Corrupt Or-
ganizations Act (RICO), 18 U.S.C.A. §§ 1961 ef seq.
Count Two alleged that the Union breached its duty of
fair representation, and that the Company breached its
contractural duties, in violation of the Labor Manage-
ment Relations Act (LMRA) § 301, 29 U.S.C.A. § 185
(a). Count Three alleged that USX and the Union com-
mitted an unfair labor practice in violation of the Na-
tional Labor Relations Act (NLRA), 29 U.S.C.A. §§ 151
et seq., by failing to negotiate in good faith. Count Four
alleged that the defendants violated their fiduciary duties
under the Employee Retirement Income Security Act
(ERISA), 29 U.S.C.A. §§ 1001 ef seq., by failing to
notify the plaintiffs or the Department of Labor of the
change in the Company’s leave policy. Finally, Count
Five alleged violations of 29 U.S.C.A. § 186, and sought
an order enjoining the defendants from future violations.

The district court certified a plaintiff class, with re-
spect to the damages claim only, of all those who were
employed by USX in Jefferson County, Alabama, and
represented by District 36 of the Union at any time be-
tween July 1, 1983, and August 14, 1990. The court,
citing “the substantial conflicts within the class” over the
plaintiffs’ request that the Agreement be rescinded, de-
clined to certify a plaintiff class with respect to the plain-
tiffs’ claims to equitable relief. During the course of dis-
covery, the plaintiffs deposed Lynn Williams, president
of the International Union, and asked him about the

8a

letter he had received from J. Bruce Johnston in March
of 1985, informing him of USX’s change in the leave-of-
absence policy. Williams testified that he made no in-
quiry upon receiving the letter, but “had some conversa-
tion about it” with the Union’s attorneys. Plaintiffs’ coun-
sel then asked Williams “What did you say and what
did they say on that occasion about the March 5, 1985
letter?” The Union’s counsel instructed Williams not to
answer on the ground that the information sought was
protected by the attorney-client privilege. After the plain-
tiffs moved for an order compelling Williams to respond
to the question, the district court determined that the an-
swer was discoverable and, on January 10, 1991, ordered
that Williams answer. The court then certified the Un-
ion’s appeal from that order, and we granted the Union’s
petition for permission to appeal.

Also during the course of discovery, USX objected to
some of the plaintiffs’ deposition questions, document re-
quests, and interrogatories, on the ground that the infor-
mation sought was protected by the attorney-client privi-
lege. When the plaintiffs filed a motion to compel USX
to respond, the district court determined that USX, by
asserting the defense that it had intended to act in com-
pliance with the law, waived the privilege with respect
to those communications bearing on the question of
USX’s intent in awarding pension credits to Union of-
ficials. Accordingly, the court granted the plaintiffs’ mo-
tions to compel USX to produce materials bearing on
USX’s knowledge of the legality of its actions. The dis-
trict court certified USX’s appeal from that order, and we
granted USX leave to appeal, consolidating the two dis-
covery appeals into one and giving it number 91-7215.

The district court granted the defendants’ motion for
summary judgment on the plaintiffs’ claims under RICO
and claims under LMRA § 301 against both USX and
the Union, on the ground that the plaintiffs had failed to
show that the discussions about pension credits had
caused them any injury. The district court dismissed the

9a

unfair labor practice claim on the ground that the Na-
tional Labor Relations Board has exclusive jurisdiction
over such claims. The district court also granted the Un-
ion’s motion for summary judgment on the plaintiff's
ERISA claim against the Union. The district court en-
tered final judgment on those claims as to which sum-
mary judgment was granted, with the exception of the
claim against the Union for violation of the duty of fair
representation under LMRA § 301, which is therefore not
before this Court. In appealing that final judgment, the
plaintiffs have abandoned the ERISA claim against the
Union and NLRA claims. They appeal only the award
of summary judgment on the RICO claim and the § 301
claim against USX for breach of contract; they also ap-
peal a number of discovery orders the district court en-
tered prior to summary judgment. That appeal bears
number 92-6218, and has been consolidated with the
discovery appeal, number 91-7215.

Il. THE DISTRICT COURT’S GRANT OF
SUMMARY JUDGMENT

A. The Standard of Review

We review a “grant[] of summary judgment de novo,
applying the same legal standard applied by the district
court in the first instance.” Fitzpatrick v. City of At-
lanta, 2 F.3d 1112, 1117 (11th Cir.1993). Summary
judgment should be granted only “if the pleadings, deposi-
tions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is
no genuine issue as to any material fact.” Fed.R.Civ.P.
- 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317,
322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).
There is a genuine issue of material fact “if the evidence
is such that a reasonable jury could return a verdict for
the nonmoving party.” Anderson v. Liberty Lobby, Inc.,
477 US. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d
202 (1986). “Credibility determinations, the weighing
of the evidence, and the drawing of legitimate inferences

10a

from the facts are jury functions, not those of a judge... .
The evidence of the non-movant is to be believed, and
all justifiable inferences are to be drawn in his favor.”
Id. at 255, 106 S.Ct. at 2513 (citing Adickes v. S.H.
Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598,
1608-09, 26 L.Ed.2d 142 (1970)). In other words, “{ilf
a reasonable fact finder could draw more than one infer-
ence from the facts, and that inference creates a genuine
issue of material fact, then the court should refuse to
grant summary judgment.” Barfield v. Brierton, 883 F.2d
923, 933-34 (11th Cir.1989).

The party seeking summary judgment bears the initial
burden of identifying for the district court those portions
of the record “which it believes demonstrate the absence
of a genuine issue of material fact.” Celotex Corp., 477
U.S. at 323, 106 S.Ct. at 2553. With regard to issues
on which the non-moving party bears the burden of proof,
the moving party need not support its motion with evi-
dence “negating the opponent’s claim.” Fitzpatrick v.
City of Atlanta, 2 F.3d 1112, 1115-16 (11th Cir.1993)
(quoting United States v. Four Parcels of Real Property,
941 F.2d 1428, 1437-38 (11th Cir.1991) (en banc)).
Once the moving party has carried its burden, the non-
moving party must show the existence of a genuine issue
of material fact to avoid summary judgment. /d.

B. The RICO Claim

The civil provision of the Racketeer Influenced and
Corrupt Organizations Act (RICO), 18 U.S.C.A. § 1964
(c) (1984 & Supp. 1993), provides that “{a]ny person
injured in his business or property by reason of a viola-
tion of section 1962 of this chapter may sue therefor in
any appropriate United States district court and shall re-
cover threefold the damages he sustains and the cost of
the suit, including a reasonable attorney’s fee.” Thus, to
recover on a civil RICO claim, the plaintiffs must prove,
first, that § 1962 was violated; second, that they were
injured in their business or property; and third, that the

lla

§ 1962 violation caused the injury. Avirgan v. Hull, 932
F.2d 1572, 1577 (11th Cir.1991), cert. denied, ——
US. , 112 S.Ct. 913, 116 L.Ed.2d 813 (1992).
Those who violate § 1962 are

those who engage in, or aid and abet another to
engage in, a pattern of racketeering activity if they
also do the following: invest income derived from
the pattern of racketeering activity in the operation
of an enterprise engaged in interstate commerce
(section 1962(a)); acquired or maintain, through
the pattern of racketeering activity, any interest in
or control over such an enterprise (section 1962
(b)); or conduct, or participate in the conduct of,
the affairs of such an enterprise through a pattern
of racketeering activity (section 1962(c)). Section
1962(d) makes it a crime to conspire to violate
sections 1962(a), (b), or (c).

Pelletier v. Zweifel, 921 F.2d 1465, 1495-96 (11th Cir.),
cert. denied, U.S. , 112 S.Ct. 167, 116 L.Ed.2d
131 (1991). “Racketeering activity” includes violations
of 29 U.S.C.A. § 186, which restricts the payments for
which a union representative can ask and which his em-
ployer can give. 18 U.S.C.A. § 1961(1)(C) (1984 &
Supp.1993); 29 U.S.C.A. § 186 (1978 & Supp.1993).

1. Violation of § 1962

USX argues that the plaintiffs failed to create a gen-
uine issue of material fact about the existence of a viola-
tion of § 1962, which is the first element of a civil RICO
claim, and the Union has adopted USX’s arguments.
First, USX argues that the plaintiffs did not proffer suf-
ficient evidence of the existence of a “pattern of racke-
teering activity.” Even as to the allegations, according to
the Company, the “[p]laintiffs allege nothing more than a
single, uncomplicated episode of alleged wrongdoing in
the nature of an alleged ‘garden-variety’ act of extortion
or bribery,” and a single act cannot constitute a “pat-

12a

tern.” Second, and in the alternative, USX argues that
even if the plaintiffs have met their burden of pleading
and have proffered sufficient evidence concerning the ex-
istence of a pattern of racketeering activity, they have
failed to meet their burden with respect to the other ele-
ments required under § 1962(a), (b), or (c). We ad-
dress these two contentions in turn.

a. The Pattern of Racketeering Activity

A “pattern of racketeering activity,” for purposes of
the RICO Act, “requires at least two acts of racketeer-
ing activity,” 18 U.S.C.A. § 1961(5) (1984 & Supp.
1993), and the Supreme Court has observed that “two
isolated acts of racketeering activity do not constitute a
pattern.” Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479,
496 n. 14, 105 S.Ct. 3275, 3285 n. 14, 87 L.Ed.2d 346
(1985). Instead, “ [i]t is the factor of continuity plus
relationship which combines to produce a pattern.’” Id.
(quoting S.Rep. No. 91-617, 91st Cong., Ist Sess. 158
(1969) (emphasis added)). More recently, the Court
has expanded on the definition of “continuity” and “re-
lationship.” Borrowing from Title X of the Organized
Crime Control Act of 1970, the Court has explained that
predicate acts are “related” if they “have the same or
similar purposes, results, participants, victims, or methods
of commission, or otherwise are interrelated by distin-
guishing characteristics and are not isolated events.” H.J.
Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 240,
109 S.Ct. 2893, 2901, 106 L.Ed.2d 195 (1989) (quot-
ing 18 U.S.C. § 3575(e)). As for ‘continuity,’ the Court
explained:

“Continuity” is both a closed- and open-ended con-
cept, referring either to a closed period of repeated
conduct, or to past conduct that by its nature proj-
ects into the future with a threat of repetition. See
Barticheck v. Fidelity Union Bank/First National
State, 832 F.2d 36, 39 (CA3 1987). It is, in either

13a

case, centrally a temporal concept—and particularly
so in the RICO context, where what must be con-
tinuous, RICO’s predicate acts or offenses, and the
relationship these predicates must bear one to an-
other, are distinct requirements. A party alleging a
RICO violation may demonstrate continuity over a
closed period by proving a series of related predi-
cates extending over a substantial period of time.
Predicate acts extending over a few weeks or months
and threatening no future criminal conduct do not
satisfy this requirement. .. .

Id. at 241-42, 109 S.Ct. at 2902.

We have held that “[a]cts that are part of the same
scheme or transaction can qualify as distinct predicate
acts,” Bank of America v. Touche Ross & Co., 782 F.2d
966, 971 (11th Cir.1986), as long as “each act consti-
tutes a separate violation of the state or federal statute
governing the conduct in question,” United States v.
Watchmaker, 761 F.2d 1459, 1475 (11th Cir.1985) (in-
ternal quotations omitted), cert. denied, 474 U.S. 1100,
106 S.Ct. 879, 88 L.Ed.2d 917 (1986). “‘If distinct
statutory violations are found, the predicate acts will be
considered to be distinct irrespective of the circumstances
under which they arose.’” United States v. Gonzalez, 921
F.2d 1530, 1545 (11th Cir.1991) (quoting Bank of
America, 782 F.2d at 971).

As the district court properly recognized, that which
USX argues is a single episode of bribery could be viewed
by a jury as a scheme consisting of multiple violations,
sufficiently interrelated and continuous to constitute a
pattern of racketeering activity. Each monthly payment
of pension benefits to the Fairfield Six could be inter-
preted as a “thing of value” for purposes of 29 U.S.C.A.
§ 186, and therefore as a separate predicate act for pur-
poses of RICO. See, e.g., United States v. Boffa, 688
F.2d 919, 935-36 (3d Cir.1982) (holding that a reason-
able jury could find that each monthly lease payment

14a

made to secure use of an automobile for a union official
for four months constituted a separate predicate act
under RICO), cert. denied, 460 U.S. 1022, 103 S.Ct.
1272, 75 L.Ed.2d 494 (1983). The jury could easily
determine from the proffered evidence that the payments
are connected by a common scheme, plan, or motive, and
therefore satisfy the relatedness requirement.

USX made payments to the Fairfield Six over a period
of three and one-half years (from December 1984 to May
1988). This case is therefore unlike Aldridge v. Lily-
Tulip, Inc., 953 F.2d 587 (11th Cir.1992), in which we
held that a fraud requiring the use of the mails for six
months “was accomplished in too short a period of time
. . . to qualify as a pattern of racketeering activity.” I/d.
at 593. Furthermore, as the district court observed, a
reasonable jury could find that the defendants carried on
racketeering activity during the 1983 negotiations, when
the Union negotiators made the illegal request, and
throughout 1984, when the pensions were established.
That period of time is sufficiently long for a reasonable
jury to conclude that the plaintiffs estblished closed-ended
continuity.

b. The Other Requirements of § 1962

USX argues in the alternative that even if the jury
could find that the defendants engaged in a pattern of
racketeering activity, the award of summary judgment
against the plaintiffs should be upheld because there is no
genuine issue of material fact that the additional elements
required for criminal liability under the various subsec-
tions of § 1962 exist. We disagree.

Under § 1962(c) it is unlawful for “any person em-
ployed by or associated with any enterprise engaged in,
or the activities of which affect, interstate or foreign
commerce, to conduct or participate, directly or indi-
rectly, in the conduct of such enterprise’s affairs through a
pattern of racketeering activity.” USX argues that a jury

tet iy

15a

could not find a violation of that subsection because USX
cannot be both the “person” and the “enterprise” con-
templated by § 1962(c). In United States v. Hartley, 678
F.2d 961, 986 (11th Cir.1982), a panel of this Court
held “that a corporation can simultaneously be named as
a defendant and satisfy the ‘enterprise’ requirement.”
(Emphasis added). USX argues that we should reverse
that position. That, of course, we cannot do, because
“[t]his panel is bound by the decisions of prior panels of
the Eleventh Circuit unless overruled by the en banc
court or the Supreme Court.” Pollgreen v. Morris, 911
F.2d 527, 534 (11th Cir.1990). Under Hartley, a rea-
sonable jury could conclude that the defendants violated
§ 1962(c); we therefore need not reach the plaintiffs’
counter-arguments that the jury could find violations of
§ 1962(a), (b), or (d), or that the jury could find a
violation of § 1962(c), even if Hartley is rejected, be-
cause the jury could find that the Fairfield Works, or the
Union, or District 36 of the Union, or the Fund, was the
“enterprise” for RICO purposes.

USX also argues that RICO is unconstitutionally vague.
In United States v. Van Dorn, 925 F.2d 1331, 1334 n. 2
(11th Cir.1991), this Court found the argument that
RICO is unconstitutionally vague to be “completely lack-
ing in merit.”

In summary, the plaintiffs have established the first
element of a civil RICO claim by producing evidence
from which a reasonable jury could conclude that the de-
fendants violated § 1962(c). Thus, the district court cor-
rectly declined to grant summary judgment on the first
RICO element. We turn now to causation, the second
element of a RICO claim, the ground on which the dis-
trict court did grant summary judgment for the defend-
ants.

16a
2. Causation

In awarding summary judgment to the defendants on
the RICO claim, the district court held that the plaintiffs
had failed to show the existence of a genuine issue of
material fact as to whether the alleged bribery of the
Union negotiators caused injury to the plaintiffs. The
court reasoned that the plaintiffs had produced no evi-
dence that the alleged bribes caused any of the -onces-
sions in the 1983 Fairfield Works Agreement [FWA],
and therefore they could not recover:

Considering [the] evidence in the light most favor-
able to the plaintiffs, the jury could find the pension
issue was the subject of secret discussions several
times during the FWA negotiations and that Rich
considered the pensions a condition of settlement,
but USX did not promise to favorably consider the
pension request until after the FWA was completed
and typed and when Rich and Phillips refused to
sign. There is also some evidence from which the
jury could infer that USX “committed” to providing
the pensions, and that USX intended to influence
Rich and Phillips in some manner.

There is no indication or evidence that the nego-
tiators on either side were swayed by their outstand-
ing request for pensions while they negotiated the
terms of the agreement. In light of the undisputed
evidence that the FWA never changed after USX
promised to consider the pension issue, the jury could
not reasonably infer that USX’s promise influenced
the negotiators to make concessions in the FWA.

More importantly, in view of the. additional un-
disputed evidence that the concessions resulted from
the need to make the Fairfield Works profitable be-
fore it was reopened, the jury could not soundly
infer that it was more likely that the concessions re-
sulted from the bribery of Union officials than from
economic necessity. From the evidence plaintiffs

17a

presented, a jury could only speculate about USX’s
motives in giving pensions to Union officials. There
is no evidence from which the jury could conclude
USX obtained the FWA concessions as a result of
paying Union officials pensions. Plaintiffs’ invitation
to assume that the concessions must have been the
result of bribery is not sufficient where the conces-
sions could just as likely have resulted from the need
to make Fairfield economically viable.

The district court’s assertion, that there was substantial
evidence that the concessions were caused by adverse eco-
nomic conditions in the steel industry at the time, appar-
ently refers to the deposition testimony of the negotiators:
that the pension question had not influenced the Agree-
ment; that the USX negotiators had said USX could not
afford to reopen the plant without concessions; and that
the Union negotiators did win a less concessionary agree-
ment than the Company had initially been willing to
accept.

We begin our analysis by observing that the plaintiffs
need not prove that the matter involving the personal
pension benefits caused all of the concessions in the
Agreement, or that the prevailing economic conditions
had no effect on the negotiations. It is well-established
that RICO plaintiffs must prove proximate causation in
order to recover. Holmes v. Securities Investor Protection
Corp., US. - . Lie SAX. i511,
1317-18, 117 L.Ed.2d 532 (1992); see also Reverend
Father O’Malley v. Reverend Father O'Neill, 887 F.2d
1557, 1561 (11th Cir.1989). In other words, “[c]ausa-
tion principles generally applicable to tort liability must
be considered applicable” in RICO cases. Brandenburg v.
Seidel, 859 F.2d 1179, 1189 (4th Cir.1988). A proxi-
mate cause is not, however, the same thing as a sole
cause. Instead, a factor is a proximate cause if it is
“a substantial factor in the sequence of responsible causa-
tion.” Hecht v. Commerce Clearing House, Inc., 897

18a

F.2d 21, 23-24 (2d Cir.1990). It is beside the point
whether the depressed condition of the steel industry also
contributed to the concessions. See W. Page Keeton et al.,
Prosser and Keeton on the Law of Torts § 41, at 268
(Sth ed. 1984) (“If the defendant’s conduct was a sub-
stantial factor in causing the plaintiffs injury, it follows
that he will not be absolved from liability merely because
other causes have contributed to the result, since such
causes, innumerable, are always present.” )

Moreover, there were many different concessions worth
varying amounts in the Agreement. The proximate cause
question is whether Rich and Phillips’ pursuit of the pen-
sions was responsible for changing the amount of any
concessions to which the Union agreed, not whether it
was responsible for the Union’s having to make any con-
cessions in the first place or most of the concessions in
the final analysis. For example, if the Agreement cost the
Union membership X million dollars in total concessions,
but would have cost only X million minus 100,000 dol-
lars in concessions but for the personal pension matter,
then that matter caused the membership 100,000 dollars
in injury. The district court appears to have recognized
as much, noting that “[p]laintiffs’ return to work under
less favorable conditions constituted an injury to their
business or property sufficient to satisfy RICO require-
ments, if plaintiffs could show they would have returned
to work under a less concessionary agreement absent the
RICO violations.” We agree with that proposition.

To avoid summary judgment, therefore, the plaintiffs
must point to evidence from which a reasonable jury
could infer that Rich and Phillips’ pursuit of pensions for
themselves and their friends caused some part of the total
dollar amount of concessions in the Fairfield Works
Agreement. The district court concluded that “the jury
could not reasonably infer that USX’s promise influenced
the negotiators to make concessions in the FWA,” be-
cause any deal on the pensions came after the Agreement

ee ees

19a

was in final form (although before it was signed). The
court seems to have assumed that the plaintiffs must prove
that USX’s ultimate agreement to provide the pension
benefits caused the concessions. However, the mere re-
quest for unearned pension benefits constituted a violation
of 29 U.S.C.A. § 186(b) and therefore was racketeering
activity under 18 U.S.C. § 1961(1)(C). That request, it
will be recalled, was first made early in the course of the
negotiations. Accordingly, the element of causation is
satisfied if the Union negotiators were influenced to make
any amount or degree of concessions in the subsequent
rounds of negotiations by their desire to convince the
Company to agree to their outstanding illegal request
coupled with the Company’s failure to reject the pension
request from the beginning.

Under the federal standard for the sufficiency of evi-
dence, a plaintiff may prove causation by circumstantial
evidence. Porter v. American Optical Corp., 641 F.2d
1128, 1142 (Sth Cir.1981), cert. denied, 454 U.S. 1109,
102 S.Ct. 686, 70 L.Ed.2d 650 (1981). “Inferences
from circumstantial facts may frequently amount to ‘full
proof’ of a given theory, and may on occasion even be
strong enough to overcome the effect of direct testimony
to the contrary.” Rutherford v. American Bank of Com-
merce, 565 F.2d 1162, 1164 (10th Cir.1977). Here,
although there may be no direct evidence that the Union
negotiators made concessions to obtain personal pension
benefits, there is a great deal of circumstantial evidence
that could lead a reasonable jury to that conclusion. We
are particularly reluctant to disregard inferences drawn
from circumstantial evidence as to the negotiators’ motive.
This Circuit is “mindful that ‘summary procedures should
be used sparingly . . . where motive and intent play lead-
ing roles, the proof is largely in the hands of the alleged
conspirators, and hostile witnesses thicken the plot.’”
Amey, Inc. v. Gulf Abstract & Title, Inc., 758 F.2d
1486, 1502 (11th Cir.1985) (quoting Norfolk Monu-
ment Co. v. Woodlawn Memorial Gardens, 394 U.S. 700,

20a

704, 89 S.Ct. 1391, 1393, 22 L.Ed.2d 658 (1969)),
cert. denied, 475 U.S. 1107, 106 S.Ct. 1513, 89 L.Ed.2d
912 (1986).

In the following paragraphs, we discuss the facts which
a reasonable jury could rationally find from the evidence
at the time summary judgment was granted, and the
evidence from which these facts could be found. Then,
we will discuss the cumulative effect of these facts and
the conclusions that rationally could be inferred) from
them. As we said in Swint v. City of Wadley, 5 F.3d
1435, 1439 (11th Cir.1993), “what we state as ‘facts’ in
this opinion for purposes of reviewing the rulings on the
summary judgment motion[ ] may not be the actual facts.
They are, however, the facts for present purposes, and
we set them out below.”

Gaining the personal pension benefits was of para-
mount concern to Rich and Phillips in the Fairfield nego-
tiations, and it was a condition of their agreement to any
settlement. Emmett Bruce Thrasher, director of another
International Union district, testified at the criminal trial
that Rich had told him that achieving the pension bene-
fits would be a prerequisite of the Union negotiators’ con-
sent to any agreement in the Fairfield negotiations. USX’s
Vice President for Labor Relations, William Miller, took
notes at an October 27, 1983, meeting during the nego-
tiations which also refer to Rich’s demand for pension
benefits as “a condition of settlement” of any agreement
at Fairfield.

Rieh and Phillips brought their personal pension de-
mand up more than once, and it was discussed inter-
mittently throughout the negotiation process. Miller testi-
fied that Rich first raised the matter after one of the
early negotiating sessions by saying “I want this taken
care of” while handing Miller a piece of paper on which
the demand for pension credit for Fairfield Union officials
was written. On December 22, 1983, two days before the
end of the negotiations, Miller met in Pittsburgh with

2la

other high-ranking USX officials and listed the pension
credits for the Union officials as one of the items still on
the table. Miller testified that he reported that, “Mr.
Rich and Mr. Phillips had continued to talk about the
matter in the context of . . . other corporations and what
they were doing.” Furthermore, when Miller asked J.
Bruce Johnston, USX Executive Vice President for Em-
ployee Relations, for instructions on how to respond to
Rich and Phillips’ ultimatum on the pension question,
Johnston responded with a very detailed set of conditions
under which USX would agree to the pension request.
(Johnston testified that he told Miller not to guarantee
anything, but the notes Miller took during the conversa-
tion contain no such instruction.) It is permissible to
infer that Johnston would not have produced such a de-
tailed list of conditions for the pension benefits if the
subject of the pension benefits had been mentioned only
once months earlier and then dropped; therefore, the bene-
fits had been discussed several times over the course of
the negotiations while the concessions were being ham-
mered out.

The subject of personal pensions for Rich and Phillips
was always discussed between them and the USX ne-
gotiators in secret. Rich first raised the issue by slipping
Miller a handwritten note after a negotiating session.
Philips testified that thereafter, when the USX negotiators
discussed the subject, they never did so in the hotel con-
ference room where the formal negotiations were held,
but only in a small room across the hall or in the hall-
way or lobby.

After the concessions were negotiated, Rich and Phillips
refused to sign the Agreement until they received assur-
ances that their pension requests would be considered
favorably. Miller testified in deposition that Rich and
Phillips refused to sign the Fairfield Agreement until they
had received an answer to their request for pension credit,
and that as far as USX was concerned, “their signatures

22a

were essential.” Only after he told them that he thought
their pension request “would be considered favorably” did
they sign, Miller testified.

The words and actions of USX officials indicate that
the Company itself believed that it had made a commit-
ment to provide the pension benefits as part of the Fair-
field Works Agreement. Johnston’s signature appears on
the recommendation for pensions for the Fairfield Six,
which states that the “pensions . . . are recommended in
accord with the December 24, 1983 agreement between
the Company and the USW at Fairfield Works.” (Em-
phasis added). According to the original proposal, the
pensions were to start on September 1, 1984. A Sep
tember 25, 1984, letter to Johnston from J.D. Short,
USX’s Vice President for Employee Benefits, refers to
a change in the starting date to February 29, 1984, “as
I understand the commitment was made that” the pensions
would be effective as of March 1. The pension requests
submitted by each of the Fairfield Six bear the notation
“Per 12-24-83 Agreement.” Furthermore, when other
Union officials applied for similar pensions, Johnston
wrote Union president Lynn Williams that the policy was
being cancelled—but that the Fairfield Six would continue
to receive their payments. That action and the documents
quoted above indicate that USX’s supposedly unilateral
change in policy was actually the result of a commitment
to provide pensions to the Fairfield Six, a commitment
given in exchange for concessions from Rich and Phillips.

The defendants tried to keep the existence of the Fair-
field Six’s pensions secret. In 1986, two years after he
had begun receiving his pension, Rich told two other
Union representatives that the pension~ matter had not
been resolved in the Fairfield negotiations, so that they
need not apply for pensions. There is evidence that Phil-
lips emphatically denied that pension credits were even
discussed at the Fairfield negotiations. Although Union
president Williams received a letter from USX in 1985
stating that USX had changed its leave-of-absence policy

23a

to allow Union representatives longer leaves of absence
“at the discretion of the Company on a case-by-case basis,”
the Union never approached the Company about grant-
ing more such leaves of absence and seems not to have
informed any of its representatives of the opportunity.
Furthermore, in its answer to a lawsuit filed by Emmett
Bruce Thrasher, also a Union representative, the Union
denied the allegation that Rich, Phillips, and others had
received pensions as part of the Agreement. In another
lawsuit brought by William Sommerville, also a Union
representative, Union attorney Bernard Kleiman swore in
an affidavit that Rich, Phillips, and two others of the Fair-
field Six had not retired from USX as of January 30,
1986, although USX records clearly indicate that, for
pension purposes, they had retired.

USX, like the Union, told no other Union representa-
tive about the change in its pension policy, although a
number of other Union representatives would appear to
have qualified for it. During the negotiations, Miller
asked Schick, USX’s General Manager of Labor Rela-
tions, to prepare information on the Fairfield Six and
to keep the matter confidential. Ed Owens, a USX official
at the Fairfield plant, was asked to prepare pension docu-
ments for the Fairfield Six and not to “publicize” it; ac-
cording to USX, those documents have now disappeared.

A jury could find it strange that those who insist that
their conduct was proper and their intent pure went to
such great lengths to hide it all from the light of day.
From such secrecy much may be inferred.

Giving the Fairfield Six the pensions Rich and Phillips
demanded during contract negotiations cost the Company
a substantial sum of money, and the Company would not
have agreed to that private concession without a conces-
sion from the Union side in return. Johnston, testifying
about a request that International Union president Lynn
Williams made during the same period that USX extend
pension benefits for workers at another plant, said that

24a

he told Jim Short: “I’m sure not going to voluntarily
give away millions of dollars that we might not have to
give away in a year in which we are losing money at an
awesome rate.” He also recalled that “all during ’83 and
’°84 we had a very correct and very tough and very hard-
nosed arm’s length relationship with the Steelworkers.” It
strains credulity to suggest that a compa1y committed to
the profit motive, in a period in which it was in dire fi-
nancial straits, would in a “very hardnosed arm’s length
relationship” give away, for nothing in return, unearned
pension benefits that cost USX hundreds of thousands of
dollars.”

Instead of receiving personal pension benefits for them-
selves and their friends, Rich and Phillips could have de-
manded and obtained from USX a reduction in the Un-
ion’s concessions of an amount equal to the cost of the
pensions. That conclusion follows as a matter of eco-
nomics from the nature of the collective bargaining proc-
ess. There is no reason why a company that would agree
to give up a dollar in unlawful pension benefits to union
officials would not instead agree to accept one dollar less
in concessions from the Union. Indeed, assuming that
freedom from the risk of detection and prosecution is
worth something to corporations and their officials, it is
reasonable to infer that the Company would have been
willing to forego more than one dollar in concessions for
every dollar it could have avoided paying out in illegal
benefits.

2 At oral argument, counsel for the Union conceded that the
pensions “may well” have been worth hundreds of thousands of
dollars. USX’s records reveal that the pensions received by the
Fairfield Six paid from $888.67 per month to $1,183.25 per month.
According to the plaintiffs, the present value of such a pension for
Emmett Bruce Thrasher, a Union official who was not included in
the Fairfield Six, would have been $88,574.00 in 1987. Whatever
their precise value, it is clear that the pensions were worth a sub-
stantial amount of money.

ren
een j .
7 ——— el

25a

In summary, negotiating their personal pensions was of
paramount concern to Rich and Phillips, and they consid-
ered it to be a condition of settlement. The issue was dis-
cussed intermittently throughout the negotiations about
concessions, and always in secret. Rich and Phillips re-
fused to sign the negotiated agreement until they received
assurances that their pension réquests would be consid-
ered favorably. The Company and its officials believed
that it was committed to pay the pension benefits as part
of the Fairfield Works Agreement. All of the defendants
tried very hard to keep the pensions secret. The pensions
cost the Company a substantial sum of money, and it
would not have agreed to them without receiving some-
thing in return. Finally, instead of using their position
as Union negotiators to gain the pensions for themselves
and their friends, Rich and Phillips could have secured
a reduction in concessions equal to or greater in value
than the pensions. From all of those facts, a reasonable
jury could conclude that the pursuit of personal pension
benefits by Rich and Phillips, coupled with the Company’s
failure to reject the idea from the beginning, caused the
Agreement to contain more concessions from the Union
than it would have contained if Rich and Phillips had
been completely loyal to the rank and file Union mem-
bership.

The district court observed that “USX did not promise
to favorably consider the pension request until after the
FWA was completed and typed and when Rich and Phil-
lips refused to sign.” Because the Agreement’s text did
not change after USX promised that the request “would
be considered favorably,” the court concluded that the
plaintiffs could not show that the Union negotiators made
any concessions to secure their pensions. The district
court erred by placing too much reliance upon the timing
of the Company’s formal promise of the illegitimate pen-
sions. As we have explained above, there was ample evi-
dence that, even without a formal agreement, the combi-
nation of illicit behavior by Rich, Phillips, and the Com-

26a

pany caused the amount of the concessions actually ne-
gotiated to be more than they would otherwise have been.

Moreover, the district court placed too little weight on
the value of the signatures of Rich and Phillips to the ne-
gotiated Collective Bargaining Agreement. Even though
the agreement had already been negotiated and the con-
cessions agreed upon, Rich and Phillips had something
that the Company needed and was willing to trade for—
their signatures as the Union’s negotiators. USX was
willing to trade a promise to grant the pension benefits
(saying the requests “would be considered favorably”) in
exchange for those signatures, and that trade was made.
Instead of trading their signatures for personal pension
benefits, which the Union concedes “may well” have been
worth hundreds of thousands of dollars, Rich and Phillips
could have traded their signatures for the benefit of all of
the workers whom they represented—refusing to sign un-
til the Company agreed to reduce the amount of conces-
sions granted by the same hundreds of thousands of dol-
lars. Thus, even focusing exclusively upon the conclusion
of the collective bargaining process, a rational jury could
infer that as a result of their demand for personal pension
benefits, the Agreement was more concessionary than it
would have been otherwise. The district court should not
have granted summary judgment for the defendants on
the causation issue.®

3. Union Liability Under RICO

The Union argues in the alternative that the district
court’s grant of summary judgment for the Union should

8 USX and the Union argue that the grant of. summary judgment
can be affirmed on the alternative ground that the plaintiffs failed
to produce evidence from which the jury could conclude that they
were actually injured (as opposed to evidence from which the jury
could conclude that the injury was caused by the pension request).
However, because a rational jury could infer that the Agreement
was more concessionary than it otherwise would have been, the
jury could find injury.

cette ehiiee fete eae ee

Bit ain, AGI rt sor ste ie

27a

be affirmed because the Union is not liable under RICO -
for the acts of its representatives. The Union argues that
because it is the victim of the racketeering activity of its
negotiators, it should not be held liable for their viola-
tions.

The plaintiffs argue that the Union can be liable under
RICO, not only under the principle of respondeat su-
perior, but also because “the Union not only learned of
its employees’ illegal acts and failed to take action, but
also willfully participated, conspired, aided and abetted,
ratified and actively concealed the illegal acts of Rich and
Phillips,” while under a fiduciary duty to act in the best
interest of its members. They contend that the Union
is not a victim; the victims, they maintain, are the “rank-
and-file” workers.

We will address in turn the theories that the parties
have put forward.

a. Liability of “Victim” Enterprise Under RICO

According to the Union, “Congress did not intend
RICO liability to attach to legitimate enterprises that are
used as passive instruments for the racketeering activities
of employees or others,” but instead intended to protect
those enterprises. The Union argues that, in response to
Congress’ intention, “the cases . . . hold that where an
individual violates RICO by using an enterprise as the
instrumentality of his racketeering activities, liability at-
taches to the wrongdoing individual, not to the enter-
prise.”

The district court determined that there was no sup-
port in the record for the Union’s claim that it was a
victim. The only injury alleged was the injury to the
Union member plaintiffs; the Union produced no evi-
dence that the Union itself had been victimized. The
court therefore held that the Union had failed to demon-
Strate the absence of a genuine issue of material fact, and
refused to grant summary judgment on the basis that the

28a

Union was a victim of racketeering activity and therefore
could not be held liable for that activity.

However, we need not address the question of whether
the Union presented adequate evidence of its victimiza-
tion, because we reject the Union’s argument that “[t]he
law in this Circuit is fully consistent with” the cases
refusing to hold RICO enterprises liable for the violations
of their subordinates. Our review of the cases cited by the
Union reveals that although some courts have recognized
a narrow exception to vicarious liability under RICO, that
exception has been created in order to preserve the non-
identity rule (that under § 1962(c), the RICO defendant
and the RICO enterprise cannot be one and the same).
As discussed in subpart B.1.b, above, this Circuit has
unequivocally rejected that rule.

The cases that the Union cites for the proposition that
an enterprise is not liable under RICO for the acts of
its employees which abuse the enterprise all trace their
roots to Haroco, Inc. v. American Nat'l Bank & Trust
Co., 747 F.2d 384 (7th Cir.1984), affd, 473 U.S. 606,
105 S.Ct. 3291, 87 L.Ed.2d 437 (1985). In Haroco,
the Seventh Circuit held that the American National
Bank could not be liable under 18 U.S.C. § 1962(c) be-
cause that subsection “requires separate entities as the
liable person and the enterprise which has its affairs con-
ducted through a pattern of racketeering activity.” Id.
at 400. The Haroco court reasoned that the “non-
identity” requirement of § 1962(c) would not allow cor-
rupt corporations to escape all RICO liability, because
§ 1962(a) contains no such requirement; under that sub-
section, “the liable person may be a corporation using
the proceeds of a pattern of racketeerifg activity in its
operations.” Jd. at 402. As a result, the “corporation-
enterprise” is “liable under RICO when the corporation
is actually the direct or indirect beneficiary of the pattern
of racketeering activity, but not when it is merely the
victim, prize, or passive instrument of racketeering.” Id.

29a

In Liquid Air Corp. v. Rogers, 834 F.2d 1297, 1306
(7th Cir.1987), cert. denied, 492 U.S. 917, 109 S.Ct.
3241, 106 L.Ed.2d 588 (1989), “to avoid holding vi-
cariously liable a corporation that was the victim of a
RICO violation,” the Seventh Circuit held that a cor-
poration will be held vicariously liable for the RICO vio-
lations of its employees “only when 1) the corporation
has derived some benefit from the RICO violation and
2) imposing vicarious liability is not inconsistent with the
intent of Congress.” Id. (emphasis omitted). Following
the reasoning laid out in Haroco, the court held that
“[v]Jicarious liability . . . has only limited application to
civil RICO.” Id. The Seventh Circuit has voiced con-
cern “that respondeat superior might be used to circum-
vent § 1962(c)’s requirement that the person conducting
the racketeering activities be separate from the enterprise
through which those activities are conducted.” Ashland
Oil, Inc. v. Arnett, 875 F.2d 1271, 1281, (7th Cir.
1989). Nonetheless, the Seventh Circuit has approved
vicarious liability when holding the employer liable would
not violate the non-identity rule: “Respondeat superior is

. . entirely appropriate under both subsections (a) and
(b)” of § 1962, because those subsections contain no
non-identity requirement. Liquid Air Corp., 834 F.2d
at 1307. Similarly, respondeat superior will make liable
under § 1962(c) a corporation whose officers conspire to
conduct the affairs of another corporation through a pat-
tern of racketeering, because the second corporation then
serves as the RICO “enterprise.” Ashland Oil, 875 F.2d
at 1281.

Despite the inclusion of some broad language, the cases
cited by the Union stand only for the proposition that, in
order to preserve the non-identity rule, vicarious liability
Should not be imposed under § 1962(c) where the em-
ployer is also the RICO enterprise. Thus, although the
First Circuit in Schofield v. First Commodity Corp., 793
F.2d 28 (1st Cir.1986), stated broadly that “the concept
of vicarious liability is directly at odds with the Congres-

30a

sional intent behind section 1962(c),” id. at 32, the ac-
tual holding of that case was merely that “section 1962
(c) does not extend liability to the enterprise,” id. at 30
(emphasis added). That was reemphasized in a recent
First Circuit opinion which viewed Schofield as holding
merely that “[s]ection 1962(c) does not recognize cor-
porate liability on the enterprise’s part under a theory of
respondeat superior.” Miranda v. Ponce Federai Bank,
948 F.2d 41, 45 (1st Cir.1991) (emphasis added).
Similarly, the Eighth Circuit declined to apply respondeat
superior to a corporate defendant for the actions of its
chief financial officer, quoting Schofield: “Both the lan-
guage of [§ 1962(c)] and the articulated primary motiva-
tion behind RICO show that Congress intended to sepa-
rate the enterprise from the criminal ‘person’ or ‘per-
sons.” Luthi v. Tonka Corp., 815 F.2d 1229, 1230
(8th Cir.1987).

The D.C. Circuit, in Yellow Bus Lines, Inc. v. Drivers,
Chauffers & Helpers Local Union 639, 883 F.2d 132,
140 (D.C.Cir.1989), rev’d in part on other grounds, 913
F.2d 948 (D.C.Cir.1990) (en banc), cert. denied, ——
USS. , 111 S.Ct. 2839, 115 L.Ed.2d 1007 (1991),
adopted Haroco’s view of subsections (a) and (c) of
§ 1962:

Through section (a), Congress provided for punish-
ment of organizations which in fact gain from their
wrongdoing by focusing on profits gleaned from il-
legal activities, thus “sparing” organizations that do
not so profit. Section (c) likewise immunizes or-
ganizations which are merely “victims,” but this re-
sult depends on the requirement of non-identity of
person and enterprise which also places some cor-
rupt organizations beyond reach.

Because of its adoption of the Schofield court’s non-identity
rule analysis, the Yellow Bus Lines court sided “with
those courts that forbid identity of person and enterprise
under § 1962(c).” Id.

-

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Hi tins anh abated MG oe

3la

The Third Circuit, in Petro-Tech, Inc. v. Western Co.,
824 F.2d 1349 (3d Cir.1987), reviewed a complaint in
which Petro-Tech sought to recover from Western on six
counts under civil RICO; Western was named as the
RICO enterprise in only some of the counts. The Third
Circuit held that imposing “respondeat superior and aid-
ing and abetting liability’ on a corporate defendant
named as the RICO enterprise under § 1962(c) “would
disrupt the intended operation of § 1962(c), by making
the § 1962(c) enterprise . . . liable.” 7d. at 1359. How-
ever, in regard to those counts in which Western was not
the § 1962(c) enterprise, “theories of respondeat super-
rior and aiding and abetting liability are not out of
place,” because the non-identity rule was not involved.
Id. at 1361-62. The Third Circuit has also held that in-
junctive relief may be granted against an employer found
to be a RICO enterprise, even if damages may not.
United States v. Local 30, United Slate, 871 F.2d 401,
405 (3d Cir.1989).

The Ninth Circuit recently noted that there is “general
agreement that respondeat superior liability is inappro-
priate under 18 U.S.C. § 1962(c) when the enterprise
and person are not distinct.” Brady v. Dairy Fresh Prod-
ucts Co., 974 F.2d 1149, 1154 (9th Cir.1992). How-
ever, reasoning that “[r]Jespondeat superior and agency
liability will encourage employers to monitor more closely
the activities of their employees and agents to ensure that
these agents are not involved in racketeering activities,”
id. at 1155, the Brady court held that “an employer that
is benefitted by its employee or agent’s violations of sec-
tion 1962(c) may be held liable under the doctrines of
respondeat superior and agency when the employer is
distinct from the enterprise,” id. at 1154.

The Sixth Circuit was recently faced with the question
whether “ordinary principles of respondeat superior’ ap-
plied to the Mutual Life Insurance Company (MONY),
a group of whose employees violated § 1962(c) by sell-

32a

ing fraudulent life insurance policies. Davis v. Mutual
Life Ins. Co., 6 F.3d 367, 380 (6th Cir.1993). The
Davis court rejected the argument that “as a matter of
law, a corporate principal may not be vicariously liable
for its agents’ actions in violation of section 1962(c).”
Id. at 378. Finding that the cases declining to apply
vicarious liability were “intertwined with the widely-
embraced principie that a corporation may not be named
as both a defendant ‘party’ and as the RICO ‘enterprise,’ ”
id., the Davis court held that those cases are not control-
ling “where the corporate defendant charged with vicar-
ious liability is separate from the RICO ‘enterprise.’ ”
Id. at 379. Instead, Davis held that:

The rule to be drawn from these cases is that plain-
tiffs may not use RICO to impose liability vicariously
on corporate “enterprises,” because to do so would
violate the distinctiveness requirement. No such pro-
hibition, however, prevents the imposition of liability
vicariously on corporate ‘persons’ on account of the
acts of their agents, particularly where the corpora-
tion benefitted by those acts. Such a prohibition, if
“it existed, would prevent corporate persons from ever
being found liable under RICO, since corporate prin-
cipals may act only through their agents. Such a rule
would be manifestly contrary to the intent of Con-
gress, and we decline to adopt it.

Id. Because the RICO enterprise involved in Davis was
the association of MONY employees who were engaged
in the fraud, the non-identity rule was not threatened, and
the court upheld the jury’s finding that MONY was liable
for the acts of its agents. See id. at 377-78.

Our review of the law of other circuits thus reveals
that the RICO exception to the application of vicarious
liability is a narrow one, created to preserve the non-
identity rule, and it therefore protects only those employ-
ers who are also the RICO enterprise for purposes of
§ 1962(c). We, of course, have squarely rejected the

33a

non-identity rule, observing that liability for the acts of
one’s agents “is simply a reality to be faced by corporate
entities. With the advantages of incorporation must come
the appendant responsibilities.” United States v. Hartley,
678 F.2d 961, 989 n. 43 (11th Cir.1982). The narrow
exception to vicarious liability recognized by some cir-
cuits in order to preserve the non-identity rule is, there-
fore, inapplicable.

Even if we had adopted the non-identity rule, however,
the Union still would not be exempt from liability in this
case. Although the plaintiffs have alleged that the Union
is a RICO enterprise for purposes of § 1962(c), they also
allege that the Fairfield Works and the Fund are enter-
prises as well. The non-identity rule would not be threat-
ened by holding the Union liable for its agents’ corrup-
tion of the mill or the Fund.

b. Respondeat Superior Liability Under RICO

The plaintiffs argue that the Union can be held liable
under general agency principles and the respondeat su-
perior doctrine. The district court ruled against the plain-
tiffs on this issue, reasoning that the Union was not liable
under agency principles because “the plaintiffs do not
claim the Union negotiators, acting with apparent author-
ity, made misrepresentations to them upon which they
relied.” The plaintiffs argue, correctly, that there is no
requirement of reliance for a principal to be liable under
RICO for the acts of its agent.

Since the district court entered its order, this Court
spelled out the elements of respondeat superior liability for
RICO violations in Quick v. People’s Bank of Cullman
County, 993 F.2d 793 (11th Cir.1993). Although we
have rejected the “non-identity” rule, we have expressed
concern that enterprises that are merely victims of the
RICO violations perpetrated by their employees should
not be held liable for the acts of their employees under
respondeat superior. In Quick, 993 F.2d at 797-98, we

34a

held that respondeat superior liability may be applied un-
der § 1962(b) only to those enterprises that derive some
benefit from the RICO violation. The Quick court also
outlined the “general agency principles” to be applied in
determining whether a prima facie case of vicarious liabil-
ity under RICO has been made out:

Under general agency rules, a corporation (prin-
cipal) will be vicariously responsible for the wrong-
ful acts of its employees (agents) when the acts are:
(1) related to and committed within the course of
employment; (2) committed in furtherance [of the
business] of the corporation; and (3) authorized or
subsequently acquiesced in by the corporation.

Id. at 797 (quoting Liquid Air Corp. v. Rogers, 834
F.2d 1297, 1306 (7th Cir.1987) (bracketed material in
original), cert. denied, 492 U.S. 917, 109 S.Ct. 3241,
106 L.Ed.2d 588 (1989)). In Quick, we upheld the
application of respondeat superior to hold a bank liable
for the actions of one of its loan officers who, among
other misdeeds, demanded deposits and loan payments
from borrowers in cash and failed to credit them to the
proper accounts. Id. at 795. Because the officer’s “ac-
tivities were incident to his assigned duties and took
place at the Bank during business hours,” we determined
that the first element of vicarious liability was satisfied.
Id. at 797. Because the officer’s activities were related to
his function of making loans, we determined that the
second element was satisfied as well. Jd. at 797-98. As
to the third element, we determined that there was suf-
ficient evidence the bank had acquiesced in the officer’s
activities because it, among other things, attempted to
cover up the misconduct. Id. at 798.

In the present case, because the demand for personal
pension benefits that Rich and Phillips made was incident
to their duties as Union representatives in the Fairfield
Works negotiations, a reasonable jury could conclude that
their actions were committed in the course of their em-

35a

ployment, so the first Quick element is satisfied. Further-
more, because the demand was related to their function
of negotiating on behalf of the Union, a reasonable jury
could conclude that the second element, that the action
be committed in the furtherance of the business of the
principal, is also satisfied. Finally, the Union’s failure to
investigate the allegations against Rich and Phillips or to
discipline them until after their convictions, coupled with
its attempt to cover up their wrongdoing, could lead a
reasonable jury to find that the Union acquiesced in their
misdeeds.

A union’s failure to act may constitute acquiescence.
In Prater v. United Mine Workers of America, 793 F.2d
1201 (11th Cir.1986), in which a union had been noti-
fied of the violent acts of some of its members, we held
that “[b]y failing to take any action to stop the violence,
union officials acquiesce[d] in or ratified the illegal ac-
tivities of the union miners.” Jd. at 1210. Similarly, in
Vulcan Materials Co. v. United Steelworkers of Amer-
ica, 430 F.2d 446 (Sth Cir.1970), cert. denied, 401
U.S. 963, 91 S.Ct. 974, 28 L.Ed.2d 247 (1971), in
which union members illegally encouraged employees of
Vulcan not to report to work, we held that although a
union official “may have advised Vulcan employees to re-
turn to work, he never took action which could reason-
abl[y] have been expected to effectuate this end and thus
can be said to have, at the very least, acquiesced in and
condoned the illegal activity.” Jd. at 457. In Local 1814,
Int'l]. Longshoremen’s Ass'n v. NLRB, 735 F.2d 1384
(D.C.Cir.), cert. denied, 469 U.S. 1072, 105 S.Ct. 565,
83 L.Ed.2d 506 (1984), two union officials had been
convicted of violating the same anti-bribery statute that
Rich and Phillips have been convicted of violating. The
D.C. Circuit held that “the Union’s retention of [the of-
ficials} in their high controlling offices, long after the
grand jury indictments had put Local 1814 on notice
of their misdeeds, is tantamount to acquiescence or con-
donation of their unlawful acts.” Jd. at 1396. The Court

36a

noted that, “[u]nder such circumstances, one might rea-
sonably have expected a truly upright union to have taken
some disciplinary action.” Id.

In the present case, there is no evidence the Union
took any disciplinary action against Rich and Phillips,
or even made any effort to investigate their actions, until
after their criminal convictions. A jury could find that
the Union was put on notice of the misdeeds of its ne-
gotiators: by Johnston’s 1985 letter to Williams, the Un-
ion’s president, informing him of the decision to change
USX policy and to grant leaves of absence to six Union
Officials; by Johnston’s 1987 letter to Williams informing
him that the policy was being dropped, but that the six
previously granted pension would continue to receive pay-
ments; by the allegations in the Thrasher and Sommerville
suits; and by the indictment in the criminal case. A jury
could therefore determine that the Union’s failure to take
any action against two of its negotiators, after being put
on notice of their violation of the anti-bribery statute, con-
stitutes acquiescence in their actions.

A reasonable jury could therefore find that the plain-
tiffs have made out a prima facie case of respondeat su-
perior liability on the Union’s part. The remaining ques-
tion under Quick is whether the Union derived some ben-
efit from the negotiators’ RICO violation. In arguing that
Rich and Phillips’ solicitation of unearned pension credits
did benefit the Union, the plaintiffs point to deposition
testimony by Union president Lynn Williams, who stated
that:

I believe that every employee of the Union. . . that
come[s] from the shops where our members work,
ought to be entitled to an indefinite leave of absence
so long as they serve the Union, ought to be entitled
at whatever time in the future history, so long as
they haven’t left the Union, to go back to their origi-
nal place of employment, and I disagree very much
with the restrictions . . . which USX has put on that
all of these years in the Agreement. . . .

ili Sibi gibi aeihctaa en bt As 26k Sra Ha an

37a

So, I think that anybody, any representative that
can push the leave of absence question past that and
enable us to get wedges out there will enable us to
move that whole leave of absence question forward,
I would think in that instance, that is a good thing.

The Union argues that it did not benefit from Rich and
Phillips’ solicitation of pension credits for the Fairfield
Six, because no pension payment was made to the Union.
It dismisses the plaintiffs reliance on Williams’ comments,
contending that Williams was merely discussing recall
rights, not pension credits, and that he did not imply that
the Union would benefit by trading contract concessions
for those rights. Payment to Union officers, the Union

, argues, “does not establish a benefit to the Union, any

more than a bank could be said to benefit from a bribe
of a group of its employees.”

The Union’s argument that it would have benefitted
had USX granted recall rights to the negotiators, but did
not benefit from the pension rights that were granted, is
a distinction without a difference. The question is not
whether the Union benefitted in some overall calculation,
weighing the concessions made against the value of the
pensions received. The question is whether the Union
“derived some benefit from the RICO violation.” Quick,
993 F.2d at 797 (emphasis added). Williams’ testimony
establishes that the Union benefits when one of its rep-
resentatives is granted a leave of absence to work for the
Union. Whether that leave confers recall rights on the
employee, or pension benefits, or both, the point is that
such benefits make Union representation more attractive,
so that the Union has an easier time recruiting workers
to serve as representatives. A jury could therefore find
that the Union benefitted from the pension benefits given
to its negotiators. We therefore must reject the Union’s
argument that the award of summary judgment can be
upheld on the grounds that the Union cannot be liable
for the RICO violations of its negotiators.

38a

c. RICO Liability for Violation of Fiduciary
Duty

The plaintiffs further argue that the Union is liable for
the acts of its representatives because it has a fiduciary
duty to the rank and file to monitor the conduct of its
representatives and to remedy their illegal actions. The
district court rejected that argument, reasoning that even
if the Union were liable for failing to take action against
Rich and Phillips, that would not make the Union liable
for the negotiators’ racketeering activity: “[a] breach of
fiduciary duty is not, in itself, racketeering activity con-
stituting a predicate act under RICO.”

It is true that the duty of fair representation that the
Union owes to its members “applies to all union activity,
including contract negotiation” and is “akin to the duty
owed by other fiduciaries to their beneficiaries.” Air Line
Pilots Ass'n, Int'l v. O'Neill, 499 U.S. 65, 67, 74, 111
S.Ct. 1127, 1130, 1134, 113 L.Ed.2d 51 (1991). The
Union may therefore be liable for approving of, acquiesc-
ing in, or concealing a breach of trust committed by one
of its employees (although we do not reach that question
here). See Restatement (Second) of Trusts, § 224(2)(c).
As we discuss below, the existence of the fiduciary duty
may also be relevant to determining the Union’s liability
for aiding and abetting the RICO violations of its nego-
tiators. However, as the district court properly held, vio-
lating a fiduciary duty is not racketeering activity under
18 U.S.C. § 1961(1), and cannot lead to RICO liability
on the Union’s part. The district court correctly rejected
the plaintiffs fiduciary duty theory of liability.

d. Liability for Ratification of Agent’s RICO
Violations

The plaintiffs argue that the Union is liable for Rich’s
and Phillips’ RICO violations because its failure to inves-
tigate or discipline the two and its efforts to conceal the
pensions they received constitute ratification of their ac-

39a

tions. The Union contends that it cannot be liable for the
acts of its negotiators because it did not ratify their acts
with “full knowledge” of the bribery scheme. The dis-
trict court appears to have agreed with the Union’s posi-
tion. The court reasoned that the letters from Johnston,
and the allegations in the Thrasher and Sommerville cases,
were insufficient to give the Union knowledge that its
negotiators had broken the law. Distinguishing between
allegations and violations, the district court said “[t]he
Union’s knowledge of . . . allegations of section 186 vio-
lations by Union negotiators is not the same as knowledge
of section 186 violations by Union negotiators.” Without
evidence that the Union knew the truth of the allegations,
the district court reasoned that the plaintiffs could not
support their claim that the Union ratified Rich and
Phillips’ actions.

“A principal can ratify the unauthorized act of an
agent purportedly done on behalf of the principal either
expressly or by implication through conduct that is in-
consistent with an intention to repudiate the unauthorized
act.” McDonald v. Hamilton Electric, Inc., 666 F.2d
509, 514 (11th Cir.), cert. denied, 459 U.S. 879, 103
S.Ct. 175, 74 L.Ed.2d 144 (1982). The district court’s
reasoning would seem to require the plaintiffs to produce
direct evidence that the Union leadership was aware that
Rich and Phillips had in fact engaged in prohibited con-
duct. However, “proof of authorization of ratification can
be based upon circumstantial evidence.” James R. Sny-
der Co. v. Edward Rose & Sons, Inc., 546 F.2d 206, 209
(6th Cir.1976). A reasonable jury could infer that the
Union’s failure to act, after having been placed on no-
tice of the negotiators’ betrayal by the allegations, con-
Stituted ratification of their misconduct.

In Yellow Bus Lines, Inc. v. Local Union 639, 883
F.2d 132, 136 (D.C.Cir.1989), rev’d in part on other
grounds, 913 F.2d 948 (D.C.Cir.1996) (en banc), cert.
denied, —— U.S. ——, 111 S.Ct. 2839, 115 L.Ed.2d

40a

1007 (1991), a Union president received a letter from
the president of a bus company which contained allega-
tions that Union members had committed violent acts;
there was no evidence “to indicate that the union took
action to investigate the allegations or to curb any ex-
cesses” of the strikers. The D.C. Circuit held that from
the Union’s “apparent lack of concern with the violence
brought to its attention, the jury plausibly could conclude
that the [Union] ‘knowingly tolerated’ this state of affairs.
No more is required to support a finding of ratification.”
Id.

The situation in this case is similar to that in Yellow
Bus Lines, and we find the reasoning of that case to be
persuasive. Union president Williams testified that he
thought it would be “a good thing” for Union represen-
tatives to “push the leave of absence question forward;”
Williams received a letter from Johnston informing him
of the change in USX policy and that six Union repre-
sentatives had been given pensions; the Thrasher and
Sommerville suits were filed, alleging that Rich and Phil-
lips had received pensions out of the Fairfield negotia-
tions, and Rich and Phillips were indicted for receiving
the bribes. In spite of all that, the Union took no action.
From the Union’s failure to act, a reasonable jury could
conclude that the Union “knowingly tolerated” the situa-
tion, and thereby ratified it. The same failure to take
action that constitutes acquiescence for purposes of re-
spondeat superior liability (as we concluded above in
subpart II.B.3.b) is also sufficient to constitute ratification.
Prater v. United Mine Workers of America, 793 F.2d
1201, 1210 (11th Cir.1986).

e. Aiding and Abetting Liability Under RICO

The plaintiffs argue that the Union is liable under
RICO for aiding and abetting the RICO violations that
Rich and Phillips committed, either because it failed to
take any action against them or because it affirmatively

4la

covered up their misdeeds. The district court held that
the Union cuuld not be liable for aiding and abetting the
actions of its representatives by virtue of “ ‘mere negative
acquiescence,’” but instead, “there must be evidence that
the Union committed an overt act designed to aide in
the success of the venture.” The court considered the
actions taken by the Union in the Thrasher and Sommer-
ville suits: denying the allegation that Rich, Phillips and
others received pensions as a result of the Fairfield Works
Agreement; and filing an affidavit by Union attorney
Bernard Kleiman, denying that Rich and Phillips were
retired from USX, when in fact they had retired and were
receiving pensions. It held that these actions could con-
stitute concealment subjecting the Union to liability if
the responsible Union officials knew the truth about the
pensions. Accordingly, the district court denied the
Union’s motion for summary judgment on the aiding and
abetting claim, although the denial appears to be without
prejudice to a renewal of the motion at the close of dis-
covery.

One who aids and abets two predicate acts can be
civilly liable under RICO. Petro-Tech, Inc. v. Western
Co. of North America, 824 F.2d 1349, 1356 (3d Cir.
1987). To establish civil liability for aiding and abetting,
the plaintiffs must show: (1) that the defendant was
generally aware of the defendant’s role as part of an over- .
all improper activity at the time that he provides the
assistance; and (2) that the defendant knowingly and
substantially assisted the principal violation. See Schne-
berger v. Wheeler, 859 F.2d 1477, 1480 (11th Cir.1988),
cert. denied, 490 U.S. 1091, 109 S.Ct. 2433, 104 L.Ed.2d
989 (1989); Woodward v. Metro Bank of Dallas, 522
F.2d 84, 94-95 (5th Cir.1975); Halberstam v. Welch,
705 F.2d 472, 477 (D.C.Cir.1983). The defendant’s
“[k]nowledge may be shown by circumstantial evidence,
or by reckless conduct.” Woodward, 522 F.2d at 96.
The same evidence that would support a jury’s finding
that the Union “knowingly tolerated” Rich and Phillips’

42a

actions pursuant to the plaintiffs’ ratification theory (the
letter from Johnston, the allegations in the Thrasher and
Sommerville suits, and the criminal indictment) will also
support a jury’s finding that the Union was aware of its
general role in the scheme.

As we have already concluded in our discussion of
causation in subpart II.B.2, above, the jury could infer
that the Union took steps to conceal the unearned pen-
sions that USX awarded to the Union’s negotiators.
Whether those steps constitute substantial assistance is a
question for the jury. The district court was therefore
correct in denying the Union’s motion for summary judg-
ment on the plaintiffs’ aiding and abetting claim.

f. Co-Conspirator’s Liability Under RICO

The plaintiffs’ final argument for Union liability is that
the Union violated 18 U.S.C. § 1962(d), which makes
it a crime “for any person to conspire to violate any of
the” other RICO provisions. (As we discussed in part
II.B, above, anyone “injured in his business or property
by reason of a violation of § 1962” may recover treble
damages.) To be adjudged liable, “each defendant in a
RICO conspiracy case must have joined knowingly in the
scheme and been involved himself, directly or indirectly,
in the commission of at least two predicate offenses.”
Feinstein v. Resolution Trust Corp., 942 F.2d 34, 41
(1st Cir.1991). Proof of an agreement is “the essence
of conspiracy.” United States v. Bright, 630 F.2d 804,
813 (Sth Cir.1980). “Thus, a defendant may wittingly
aid a criminal act and be liable as an aider and abettor,
but not be liable for conspiracy, which requires knowl-
edge of and voluntary participation in an agreement to do
an illegal act.” Id. (citations omitted). However, “[t]he
existence of the conspiracy agreement does not have to
be proven by direct evidence. Instead, it can be inferred
from “‘the conduct of the alleged participants or from
circumstantial evidence of the scheme.’” United States
v. LeQuire, 943 F.2d 1554, 1562 (11th Cir.1991) (quot-

43a

ing United States v. Ard, 731 F.2d 718, 724 (11th Cir.
1984)), cert. denied, US. , 112 S.Ct. 3037,
120 L.Ed.2d 906 (1992). As the district court properly
noted, evidence that a defendant assisted in the conceal-
ment of a conspiracy may support an inference that the
defendant joined in it while it was still in operation.
United States v. Gold, 743 F.2d 800, 825 (11th Cir.
1984) (quoting United States v. Freeman, 498 F.2d 569,
576 (2d Cir.1974)), cert. denied, 469 U.S. 1217, 105
S.Ct. 1196, 84 L.Ed.2d 341 (1985).

The district court reasoned that, if the plaintiffs were
able to show that the Union concealed the racketeering
activity of its representatives, a “jury could reasonably
infer that the Union joined in while the conspiracy was
still in operation,” and the Union would therefore be
liable. We agree. Because a jury could infer that the
Union took steps to conceal Rich’s and Phillips’ RICO
violations, a jury should decide whether the Union is
liable for conspiring with them.

g. Summary of Holdings on Union Liability

We agree with the district court that the Union cannot
be liable for its representatives’ RICO violations under
the theory that it violated a fiduciary duty to its members.
However, the plaintiffs are entitled to go to trial on their
claims that the Union is liable for Rich’s and Phillips’
RICO violations under respondeat superior, ratification,
aiding and abetting, and conspiracy theories. We there-
fore reject the Union’s argument that the award of sum-
mary judgment must be upheld because it cannot be
liable under RICO.

C. THE § 301 CLAIM AGAINST USX

The plaintiffs contend that the district court erred in
entering summary judgment against them on their “hy-
brid” claim against USX for breach of contract under
§ 301 of the Labor Management Relations Act, 29 U.S.C.

44a

§ 185. As the Supreme Court explained in DelCostello
v. International Bhd. of Teamsters, 462 U.S. 151, 163-
65, 103 S.Ct. 2281, 2290-91, 76 L.Ed.2d 476 (1983),

an individual employee may bring suit against his
employer for breach of a collective-bargaining agree-
ment. Ordinarily, however, an employee is required
to attempt to exhaust any grievance or arbitration
remedies provided in the collective-bargaining agree-
ment. . . . [H]owever, we recognized that this rule
works an unacceptable injustice when the union rep-
resenting the employee in the grievance/arbitration
procedure acts in such a discriminatory, dishonest,
arbitrary, or perfunctory fashion as to breach its duty
of fair representation. In such an instance, an em-
ployee may bring suit against both the employer and
the union, notwithstanding the outcome or finality of
the grievance or arbitration proceeding. Such a suit,
as a formal matter, comprises two causes of action.
The suit against the employer rests on § 301, since
the employee is alleging a breach of the collective-
bargaining agreement. The suit against the union is
one for breach of the union’s duty of fair representa-
tion. . . . The employee may, if he chooses, sue one
defendant and not the other, but the case he must
prove is the same whether he sues one, the other,
or both.

(internal citations and quotation omitted). The plain-
tiffs argue that,

{b]Jecause the [Fairfield Works] Agreement is void
and unenforceable, USX breached its contractual ob-
ligations when USX did not pay members of plain-
tiff class the full compensation which they should
have been paid (from 1984 to date) based on the
1983 Basic Labor Agreement, the 1987 Basic Labor
Agreement, and prior practices, without regard to
the [Fairfield Works] Agreement.

(The Basic Labor Agreement, between USX and the In-
ternational, governs all of USX’s plants in Canada and

45a

the United States, in the absence of local agreements. )
The district court rejected the claim on the same ground
on which it rejected the RICO claim—that “the court can
find no evidence of record from which a jury could con-
clude that the concessions in the FWA were given in ex-
change for the pensions.” Having decided that a jury
could infer that the Fairfield Works Agreement is more
concessionary than it would have been had the Union
negotiators not solicited and received unearned pension
benefits (in subpart II.B.2, above), we cannot agree with
the district court’s reasoning or affirm its order granting
summary judgment on that basis.

USX argues that we should affirm the grant of sum-
mary judgment on the alternative ground—which the dis-
trict court rejected—that the plaintiffs’ § 301 claim was
not timely brought. In DelCostello, the Supreme Court
held that the 6-month statute of limitations from § 10(b)
of the National Labor Relations Act should be applied
to § 301 suits. 462 U.S. at 169, 103 S.Ct. at 2293. The
district court, applying a discovery rule, held that the
suit was timely brought, because the defendants were un-
able to show that the plaintiffs should have uncovered
adequate grounds for filing suit prior to six months be-
fore the suit was actually filed in December 1988. On
appeal, USX argues that our decision in Hill v. Texaco,
Inc., 825 F.2d 333 (11th Cir.1987), precludes the ap-
plication of a discovery rule to actions brought pursuant
to a § 10(b) statute of limitations period. In that case,
we observed that principles of equitable tolling “cannot
be applied in the face of contrary congressional intent.”
Id. at 334. According to USX, because § 10(b) states
that “no complaint shall issue based upon any unfair
labor practice occurring more than six months prior to
the filing of the charge,” it would be contrary to Con-
gressional intent to apply equitable tolling principles to
a § 301 suit. However, we have already held that the dis-
covery rule applies to claims under § 301: “Generally,
a cause of action accrues under § 301, and the statute

46a

of limitations begins to run, when in the exercise of rea-
sonable diligence the claimant knew or should have known
of the injury.” Hill v. Georgia Power Co., 786 F.2d 1071,
1074-75 (11th Cir.1986) (emphasis added); see also
Santiago v. Lykes Bros. S.S. Co., 986 F.2d 423, 427
n. 3 (11th Cir.1993). We are, of course, bound by
these prior decisions. The district court’s refusal to grant
summary judgment on the ground of timeliness was there-
fore entirely correct.

USX also argues that summary judgment is proper on
the alternative ground that the plaintiffs’ § 301 claim is
meritless, because “operations in accordance with con-
sensual modifications” to the Basic Labor Agreement can-
not be a breach of contract. In USX’s view, the plain-
tiffs’ claim is one against the Union for breach of the duty
of fair representation in signing a bad contract, not
against the Company: “where, as here, the duty of fair
representation claim is based upon a breach of duty in
negotiating a labor agreement, no § 301 employer con-
tract breach is implicated at all.” However, the plaintiffs
do not allege merely that Rich and Phillips negotiated a
bad faith deal, and we have already concluded that a
reasonable jury could infer that USX took advantage of
Rich’s and Phillips’ willingness to pursue personal gain
by signing a more concessionary Fairfield Works Agree-
ment than they otherwise would have. And, “{o]f course,
a bargain by which a fiduciary takes advantage of his
position to profit at the expense of the beneficiary is
fraudulent and is voidable by the beneficiary.” 6A Ar-
thur Corbin, Corbin on Contracts, § 1456, at 534 (1962).
Rich and Phillips were fiduciaries of the rank-and-file un-
ion membership; the Supreme Court has held that the
“duty of fair representation” a Union owes to its mem-
bers “is . . . akin to the duty owed by other fiduciaries
to their beneficiaries.” Airline Pilots Ass’n, Int'l v.
O'Neill, 499 U.S. 65, 74, 111 S.Ct. 1127, 1134, 113
L.Ed.2d 51 (1991). The Agreement is therefore void-
able.

47a

That does not mean, however, that the plaintiffs are
entitled to recover the difference between what they were
paid under the Fairfield Works Agreement and what they
would have been paid under the Basic Labor Agreement.
Upon rescinding a voidable contract, the plaintiffs are
entitled “to the reasonable value of a performance ren-
dered” to the Company. 6A Corbin, § 1535, at 822.
“Reasonable value” is determined by the marketplace, free
of illegitimate taint. It is clear that the rates provided for
in the Basic Labor Agreement are not the reasonable
market value the plaintiffs would have received for their
labors, because it is undisputed that USX had shut down
the facility rather than pay those rates. Instead, the
proper measure of the value of the work done is the value
that the parties would have agreed upon had the Union
negotiators not violated their fiduciary duty. In other
words, if a jury finds that the contract was voidable, the
plaintiffs are entitled to recover the value of the conces-
sions that the Union negotiators would have extracted
from the company if the negotiators had not been pur-
suing their personal pension benefits.

Ill. THE ISSUES RELATING TO DISCOVERY

The Union and USX both appeal from orders of the
district court rejecting their invocation of the attorney-
client privilege during discovery. In the interlocutory ap-
peal and in the appeal of summary judgment on the
RICO claim, the plaintiffs complain of limits the district
court has placed on their discovery efforts. The areas
of discovery affected by the limits may be grouped into
four categories: USX pension practices at other plants;
grand jury materials; attorney work-product; and limiting
the deposition of USX and Union attorneys to written
interrogatories.

The Union argues that the plaintiffs failed properly
to raise the issues in the district court. According to the
Union, the plaintiffs should not be allowed to appeal the
limitations on their discovery efforts because the plain-

48a

tiffs failed to request further discovery into the four areas
in either of its Rule 56(f) motions.* (The plaintiffs did
request further discovery of the attorney-client communi-
cations and we discuss those requests below.) However,
we cannot agree that the plaintiffs should have included
the issues in their Rule 56(f) motions. As the plaintiffs’
observe, it would not make sense to require them to re-
quest “deferral of the summary judgment motions until
plaintiffs could complete discovery which the district court
already denied.” Having raised the issues below, and hav-
ing appealed from the entry of final judgment, the plain-
tiffs are entitled to raise the issues on appeal.

A. Standard of Review

To the extent that the appeals involve mixed questions
of law and fact, regarding the applicability of the attor-
ney-client privilege to particular communications that the
plaintiffs wish to discover, our review is plenary. In re
Grand Jury Matter No. 91-01386, 969 F.2d 995, 997
(11th Cir. 1992); In re Grand Jury Proceedings 88-9
(MIA), 899 F.2d 1039, 1042 (11th Cir.1990). Other-
wise, matters of discovery and evidence are committed
to the discretion of the district court. Wu v. Thomas,
996 F.2d 271, 275 (11th Cir.1993); Lee v. Etowah

* When the plaintiffs first raised this issue in the interlocutory
appeal, the Union filed a motion, which was carried with the case,
to dismiss the plaintiffs’ cross-appeal for want of jurisdiction.
The Union’s argument was that, because the district court denied
the plaintiffs’ motion for certification of those parts of the order
dealing with rulings adverse to the plaintiffs, they should be con-
sidered to be different orders for purposes of the interlocutory
appeal. The Union’s motion was made moot, however, when the
plaintiffs raised the same issues in their appeal from the district
court’s entry of final judgment on the RICO and § 801 claims.
“C[Wlhen reviewing an appeal from a final judgment, this court
can review rulings on previous interlocutory orders.” Jones v.
Preuit & Mauldin, 808 F.2d 1435, 1488 n. 1 (11th Cir.1987) (citing
Aaro, Ine. v. Daewoo Int'l (America) Corp., 755 F.2d 1898, 1400
(11th Cir.1985)). The Union’s motion to dismiss the cross-appeal
is therefore denied.

49a

County Bd. of Educ., 963 F.2d 1416, 1420 (11th Cir.
1992). Discovery orders should not be overturned “un-
less the district court has abused its discretion and such
abuse has resulted in substantial harm to the party seek-
ing relief.” Arabian American Oil Co. v. Scrafone, 939
F.2d 1472, 1477 (11th Cir.1991).

B. The Union’s Attorney-Client Privilege

The district court determined that the Union could not
assert the attorney-client privilege against the plaintiffs to
prevent them from discovering the content of Union Pres-
ident Williams’ discussion with the Union’s attorneys re-
garding USX’s change in its leave of absence policy. Al-
though the court rejected the plaintiffs’ argument that the
crime-fraud exception to the attorney-client privilege ap-
plies, it accepted their argument that the Garner doctrine
prevents the Union from invoking the privilege against
the plaintiffs, to whom, as members, the Union owes a
fiduciary duty.

According to Federal Rule of Evidence 501, “the priv-
ilege of a witness . . . shall be governed by the principles
of the common law as they may be interpreted by the
courts of the United States in the light of reason and ex-
perience.” The attorney-client privilege, “the oldest of the
privileges for confidential communications known to the
common law,” United States v. Zolin, 491 U.S. 554, 562,
109 S.Ct. 2619, 2625, 105 L.Ed.2d 469 (1989) (quot-
ing Upjohn Co. v. United States, 449 U.S. 383, 389, 101
S.Ct. 677, 682, 66 L.Ed.2d 584 (1981)), protects the
disclosures that a client makes to his attorney, in confi-
dence, for the purpose of securing legal advice or assist-
ance. In re Grand Jury (G.J. No. 87-03-A), 845 F.2d
896, 897 (11th Cir.1988). Based on the theory that
“sound legal advice or advocacy . . . depends upon the
lawyer’s being fully informed by the client,” the privilege
is designed “to encourage full and frank communication
between attorneys and their clients and thereby promote
broader public interests in the observance of law and ad-

50a

ministration of justice.” Upjohn, 449 U.S. at 389, 101
S.Ct. at 682. Despite its value in encouraging clients to
confide in their counsel, we have recognized that, as “ ‘an
obstacle to the investigation of the truth,’” the privilege
is not without exceptions. Garner v. Wolfinbarger, 430
F.2d 1093, 1101 (Sth Cir.1970) (quoting 8 Wigmore,
Evidence, § 2291, at 554), cert. denied, 401 U.S. 974,
91 S.Ct. 1191, 28 L.Ed.2d 323 (1971).

1. The Garner Doctrine

The Garner court determined that shareholders suing
their corporation may discover communications otherwise
protected by the attorney-client privilege upon a showing of
good cause. The Garner court observed that “management
does not manage for itself and that the beneficiaries of its
action are the stockholders.” Jd. at 1101. It is, therefore,
“difficult to rationally defend the assertion of the privi-
lege if all, or substantially all, stockholders desire to in-
quire into the attorney’s communications with corporate
representatives who have only nominal ownership inter-
ests, or even none at all.” Jd. However, Garner recog-
nized that “the complete removal of the attorney-client
privilege from the grasp of the corporation client . . .
would expose corporations to harassment suits by minority
stockholders and a possible deterioration of candid attor-
ney-client communication and effective corporate manage-
ment.” Cohen v. Uniroyal, Inc., 80 F.D.R. 480, 483
(E.D.Pa.1978). Garner therefore does not eliminate the
privilege altogether “merely because those demanding in-
formation enjoy the status of stockholders.” Garner, 430
F.2d at 1103. Rather, stockholders are given the oppor-
tunity “to show cause why [the privilege] should not be
invoked in the particular instance.” Jd. at’1104. The
Garner panel listed nine factors to be considered in de-
termining whether good cause has been shown:

[1] the number of shareholders {seeking discovery]
and the percentage of stock they represent; [2] the

S5la

bona fides of the shareholders; [3] the nature of the
shareholders’ claim and whether it is obviously color-
able; [4] the apparent necessity or desirability of the
shareholders having the information and the avail-
ability of it from other sources; [5] whether, if the
shareholders claim is of wrongful action by the cor-
poration, it is of action criminal, or illegal but not
criminal, or of doubtful legality; [6] whether the
communication related to past or to prospective ac-
tions; [7] whether the communication is of advice
concerning the litigation itself; [8] the extent to
which the communication is identified versus the ex-
tent to which the shareholders are blindly fishing;
[9] the risk of revelation of trade secrets or other in-
formation in whose confidentiality the corporation
has an interest for independent reasons.
Id.

The plaintiffs argue that the Garner doctrine applies
to a union’s assertion of the attorney-client privilege
against its members. See Nellis v. Air Line Pilots Ass’n,
144 F.R.D. 68, 71 (E.D.Va.1992) (holding that the
Garner doctrine applies because unions owe a fiduciary
duty to their members under Air Line Pilots Ass'n v.
O’Neill, 499 U.S. 65, 74, 111 S.Ct. 1127, 1134, 113
L.Ed.2d 51 (1991)); Aguinaga v. John Morrell & Co.,
112 F.R.D. 671, 681 (D.Kan.1986) (holding that the
Garner doctrine applies to unions because “union officials’
association with their members possesses all the essential
characteristics of a fiduciary relationship”); Boswell v. In-
ternational Bhd. of Elec. Workers Local 164, 106 L.R.R.M.
(BNA) 2713, 1981 WL 27188 (D.N.J.1981) (applying
Garner to suit brought by union member against union).
The Union urges that we adopt the Ninth Circuit’s read-
ing of Garner in Weil v. Investment/Indicators Research
and Management, Inc., 647 F.2d 18, 23 (9th Cir.1981),
that “Garner’s holding and policy rationale simply do not
apply” outside the context of the shareholder derivative
suit. Alternatively, the Union argues that the plaintiffs

=. 9

52a

have failed to show good cause, because they are a small
percentage of the Union’s membership, seeking damages
from the Union for themselves, and have shown no need
to know what legal advice Williams received.

The district court determined that the Garner doctrine
should apply to the Union, because Garner was premised
“on the view that corporate management owed fiduciary
duties to the stockholders of the corporation,” and be-
cause “the relationship between union and union mem-
bers” likewise “has fiduciary overtones.” The court then
determined that the plaintiffs had shown good cause, be-
cause “the plaintiff class here is a significant percentage
of the total Union membership,” and “the plaintiffs’ suit
advances the general membership’s interest in providing a
check on the Union’s proper discharge of its fiduciary
duties to the members.” The court also noted that the
plaintiffs’ claim was colorable, that they had identified the
specific communication that they wished to discover, that
no trade secret is involved, and that there is no other
source “from which plaintiffs might gain the same in-
formation.”

Because we hold that even if the Garner doctrine ap-
plies, it does not support an exception to the attorney-
client privilege under the facts of this case, we need not
decide whether the Garner doctrine does apply to disputes
between a union and its members. We do note that the
Fifth Circuit has firmly rejected “the Ninth Circuit’s nar-
row interpretation of the types of suits covered by Gar-
ner.” Ward v. Succession of Freeman, 854 F.2d 780,
786 (5th Cir.1988) (citing In re International Sys. &
Controls Corp. Sec. Litig., 693 F.2d 1235, 1239 n. 1
(Sth Cir.1982)), cert. denied, 490 U.S. 1065, 109 S.Ct.
2064, 104 L.Ed.2d 629 (1989). However, in applying
Garner to suits brought by shareholders seeking to re-
cover for themselves at the corporation’s expense, the
Fifth Circuit:

recognize{d] reason in the Weil holding: Where
shareholders bring a successful derivative action on

53a

behalf of the corporation, they benefit al] sharehold-
ers. Where, however, shareholders seek to recover
damages from the corporation for themselves, they
do not even seek a gain for all others. In the latter
circumstance, the motivations behind the suit are
more suspect, and thus more subject to careful scru-
tiny, in determining if good cause for suspending the
privilege exists.

Id. at 786. After applying that “careful scrutiny,” the
Ward court determined that the plaintiffs had failed to
show good cause; one of the reasons given was that the
“[p]laintiffs cumulatively owned less than four [percent]
of the stock in LA Coke.” Id.

Even assuming the Gardner doctrine applies to unions,
on the facts of this case discovery of the attorney-client
communications should not be allowed. Although many
of the factors listed in Garner appear to support the plain-
tiffs’ argument that there is good cause for discovery, two
factors foreclose it: the fact that only a tiny percentage
of the defendant Union’s members are members of the
plaintiff class; and the fact that the interest of the plain-
tiff class is adverse to those who are not in the class.
Compare Ward, 854 F.2d at 786 (fact that plaintiffs
owned less than four percent of stock weighs against
finding of good cause) with Fausek v. White, 965 F.2d
126, 133 (6th Cir.) (fact that plaintiffs own 40% of
corporation’s stock weighs for finding good cause), cert.
denied, US. , 113 S.Ct. 814, 121 L.Ed.2d
686 (1992). Garner recognized that, in a shareholder
derivative suit, which the plaintiffs bring on behalf of the
corporation, “it is difficult to rationally defend the asser-
tion of the privilege if all, or substantially all, stockhold-
ers desire to inquire into the attorney's communications
with corporate representatives.” 430 F.2d at 1101 (em-
phasis added). This case, however, is unlike the share-
holder derivative suit in Garner, because the plaintiff class
in this case consists of only about one-half of one percent
of the international union’s membership. The plaintiffs

54a

argue that the district court’s assertion that the plaintiff
class represents “a significant percentage of the total Un-
ion membership” can be defended on the ground that the
class “represents practically one hundred percent of the
USX employees at [the Fairfield] Works who are covered
by the [Fairfield] Agreement.” The problem with that
reasoning is that the lawsuit was not filed against the
local union that represents only Fairfield workers; it was
filed against the international union. Moreover, the at-
torney-client communication in question was not to an
officer of the local union but to an officer of the interna-
tional union. Therefore, the proper measure of signifi-
cance for the plaintiff class is in terms of the national
union, whose membership is so large that it dwarfs the
size of the plaintiff class.

This case is also unlike the shareholder derivative suit
in Garner, and is unlike the shareholders’ suit against a
chief executive officer in Fausek, because there is no iden-
tity of interests between the plaintiffs and the non-plain-
tiff Union members. Instead, their interests are adverse.
The plaintiffs in the present case seek damages not on
behalf of the Union, but for their personal benefit at
the expense of the Union and its other members. Their
interests are directly adverse to those of the other Union
members. Garner noted that “[d]ue regard must be paid
to the interests of nonparty stockholders, which may be
affected by impinging on the privilege.” Jd. at 1101 n.
17. Where such a small fraction of the Union’s member-
ship seeks to pierce the attorney-client privilege at the
expense of the remaining ninety-nine and one-half per-
cent, “due regard” for the interest of the non-party mem-
bers requires that the plaintiffs’ request be rejected.

2. The Crime-Fraud Exception

The plaintiffs argue in the alternative that the district
court’s order compelling Williams’ testimony can be up-
held under the crime-fraud exception to the attorney-client
privilege, because “the Union by its counsel” subsequently

55a

made numerous false statements about the pension status
of its negotiators, as part of an effort to conceal their
illegal actions. The district court rejected this argument
because “there is no evidence showing the communica-
tion furthered any crime or fraud, or . . . was connected
with any crime or fraud.”

To determine whether the crime-fraud exception ap-
plies, we employ a two-part test laid out In re Grand
Jury Investigation (Schroeder), 842 F.2d 1223, 1226
(11th Cir. 1987):

First, there must be a prima facie showing that the
client was engaged in criminal or fraudulent conduct
when he sought the advice of counsel, that he was
planning such conduct when he sought the advice of
counsel, or that he committed a crime or fraud sub-
sequent to receiving the benefit of counsel’s advice.
Second, there must be a showing that the attorney’s
assistance was obtained in furtherance of the crimi-
nal or fraudulent activity or was closely related to it.

Accord, In re Federal Grand Jury Proceedings, 89-10
(MIA), 938 F.2d 1578, 1581 (11th Cir.1991).

While the plaintiffs’ evidence on the existence of Union
cover-up may satisfy the first prong of the test, we agree
with the district court that they have failed to satisfy the
second. The purpose of the second prong is to identify
“communications that should not be privileged because
they were used to further a crime or a fraud.” Schroeder,
842 F.2d at 1227. Although that determination “must
take into account that the [party seeking discovery] does
not know precisely what the material will reveal or how
useful it will be,” id., “[t]here is no reason to permit op-
ponents of the privilege to engage in groundless fishing
expeditions,” U.S. v. Zolin, 491 U.S. 554, 571, 109 S.Ct.
2619, 2630, 105 L.Ed.2d 469 (1989).

Before engaging in in camera review to determine
the applicability of the crime-fraud exception, the

ee |

56a

judge should require a showing of a factual basis
adequate to support a good faith belief by a reason-
able person that in camera review of the materials
may reveal evidence to establish the claim that the
crime-fraud exception applies.

Once that showing is made, the decision whether
to engage in in camera review rests in the sound dis-
cretion of the district court.

Id. at 572, 109 S.Ct. at 2631 (internal citations and
quotation omitted). The plaintiffs have failed to produce
any evidence that William’s communications with the
Union’s attorneys regarding the Johnston letter furthered
or were closely related to an effort on the Union’s part
to conceal the illegal actions of its negotiators. They
have therefore failed to show that the district court abused
its discretion in refusing to permit even an in camera
review of the communications involved.

3. Waiver

Finally, the plaintiffs argue that the Union waived the
attorney-client privilege by allowing counsel Kleiman to
testify in the criminal trial, and by filing Kleiman’s affi-
davits in lawsuits brought by Union representatives who
did not receive pensions. At the criminal trial, Kleiman
testified about the receipt of the letter from Johnston,
and what he did in response; Kleiman did not testify as
to the conversation he had with Williams about the letter.
The district court reasoned that the Union did not waive
the privilege because Kleiman did not disclose any con-
fidential communications.

The attorney-client privilege “belongs sdlely to the
client,” and the client may waive it, either expressly or
by implication. In re Von Bulow, 828 F.2d 94, 100, 101
(2d Cir. 1987). We have observed that the doctrine
of waiver by implication reflects the position that the
attorney-client privilege “‘was intended as a shield, not

epee ae ee

57a

a sword.’” GAB Business Services, Inc. v. Syndicate
627, 809 F.2d 755, 762 (11th Cir.1987) (applying
Florida law) (quoting Pitney-Bowes, Inc. v. Mestre, 86
F.R.D. 444, 446 (S.D.Fla.1980)). In other words, “{a]
defendant may not use the privilege to prejudice his op-
ponent’s case or to disclose some selected communica-
tions for self-serving purposes.” United States v. Bilzerian,
926 F.2d 1285, 1292 (2d Cir.), cert. denied, US.
» 112 S.Ct. 63, 116 L.Ed.2d 39 (1991); accord
United States v. Jones, 696 F.2d 1069, 1072 (4th Cir.
1982) (“Selective disclosure for tactical purposes waives
the privilege.”).

The plaintiffs’ position appears to be that, having
allowed Kleiman to testify about the Johnston letter and
the pension status of the Union’s negotiators, the Union
impliedly waived the privilege as to Williams’s communi-
cations with Kleiman on the subject: There is support
for that position in the version of the implied waiver rule
suggested in Wigmore’s treatise: “[t]he client’s offer of
his own testimony as to specific facts about which he has
happened to communicate with the attorney is not a
waiver .... But his offer of the attorney’s testimony
as to such specific facts is a waiver,” and “a waiver at a
first trial should suffice as a waiver for a later trial.” 8
Wigmore, Evidence § 2298, at 638, 639 (McNaughton
rev. 1961) (penultimate emphasis added). Wigmore
bases the distinction between the client offering testimony
On a subject, and the attorney doing the same, on his
view that “the attorney ought in general not to be used
as a witness.” Id. at 637.

However, Wigmore’s broad version of the rule goes
beyond the considerations of fairness that have motivated
the application of the rule; courts generally have not
found a waiver where the party attacking the privilege
has not been prejudiced:

The great weight of authority holds that the attorney-
client privilege is waived when a litigant places in-

j |

58a

formation protected by it in issue through some af-
firmative act for his own benefit, and to allow the
privilege to protect against disclosure of such infor-
mation would be manifestly unfair to the opposing
party.
Conkling v. Turner, 883 F.2d 431, 434 (Sth Cir.1989)
(emphasis added) (internal quotation omitted); see also
United States v. Aronoff, 466 F.Supp. 855, 863 (S.D.
N.Y.1979) (finding no waiver where party attacking
privilege alleges no prejudice); Goldman, Sachs & Co.
v. Blondis, 412 F.Supp. 286, 288 (N.D.Ill.1976) (ob-
serving that “it is a uniform rule that when a party’s con-
duct reaches a certain point of disclosure, fairness requires
that the privilege cease” (emphasis added)); Wender v.
United States Automobile Ass’n, 434 A.2d 1372, 1374-
75 (D.C.1981) (basing waiver analysis on considerations
of fairness); State v. Von Bulow, 475 A.2d 995, 1007
(R.I.) (citing Aronoff and basing implied waiver analysis
on considerations of fairness), cert. denied, 469 U.S. 875,
105 S.Ct. 233, 83 L.Ed.2d 162 (1984). In Sedco Int'l
S.A. v. Cory, 683 F.2d 1201, 1206 (8th Cir.), cert.
denied, 459 U.S. 1017, 103 S.Ct. 379, 74 L.Ed.2d 512
(1982), the Eighth Circuit observed that “[cJourts have
found waiver by implication” in three sets of circum-
stances: “[(1)] when a client testifies concerning por-
tions of the attorney-client communication, [(2)] when
a client places the attorney-client relationship directly at
issue, and [(3)] when a client asserts reliance on an
attorney’s advice as an element of a claim or defense.”
(Internal citations omitted). As a district court in our
Circuit has observed:

“Tajll of these established exceptions to the rules of
privilege have a common denominator; in each in-
stance, the party asserting the privilege placed infor-
mation protected by it in issue through some affirm-
ative act for his own benefit, and to allow the privi-
lege to protect against disclosure of such information

59a

would have been manifestly unfair to the opposing
party.”

Pitney-Bowes, Inc. v. Mestre, 86 F.R.D. 444, 447 (S.D.
Fla.1980) (quoting Hearn v. Rhay, 68 F.R.D. 574, 581
(E.D.Wash.1975) ).

Because the plaintiffs have failed to explain how they
have been prejudiced by any of the actions taken by the
Union’s lawyers in the criminal case, we decline to find
that the Union has impliedly waived its privilege. See
Remington Arms Co. v. Liberty Mutual Ins. Co., 142
F.R.D. 408, 415 (D.Del.1992) (holding that the “Court
cannot justify finding a waiver of privileged information
merely to provide the opposing party information help-
ful to its cross-examination or because information is
relevant”).

Because the attorney-client privilege is not rendered
inapplicable by the Garner doctrine or the crime-fraud
exception, and because it was not waived, the ruling of
the district court granting the plaintiff's motion to compel
William’s testimony is therefore reversed.

C. USX’S Attorney-Client Privilege

In the proceedings before the district court, USX has
consistently taken the position that “[a]t the time the re-
vised leave-of-absence policy was implemented in Oc-
tober, 1984, . . . USX believed the policy to be lawful.”
Memorandum of USX Corporation and United States
Steel and Carnegie Pension Fund In Support of Their
Motion To Dismiss, April 3, 1989, at 5; see also Pretrial
Order at 5. Although USX has denied any intent to
assert a defense of advice of counsel or to rely on any
privileged attorney-client communications in its defense,
the district court observed that “USX’s defense . . . neces-
sarily implicates all of the information at its disposal when
it made the decision to change the leave of absence policy
and later, to rescind the change.” Reasoning that “it

60a

would be inequitable to allow USX to present evidence
tending to show that it intended to comply with the law,
while allowing it to cloak in privilege those documents
tending to show it might have known its actions did not
conform to the law,” the district court held that USX
waived the attorney-client privilege with regard to such
communications.

USX argues that it was the plaintiffs who injected the
issue of USX’s “state of mind” into the case by including
allegations of intentional, criminal wrongdoing in their
complaint. Because 29 U.S.C. § 186, the criminal statute
that the plaintiffs claim USX violated, contains a com-
ponent of “willfulness,” USX argues that it has merely
denied the plaintiffs’ allegations, and that a mere denial
of mens rea should not constitute waiver of the attorney-
client privilege.

As we discussed in the previous section, the attorney-
client privilege “ ‘was intended as a shield, not a sword.’ ”
GAB Business Services, Incv. v. Syndicate 627, 809
F.2d 755, 762 (11th Cir.1987) (quoting Pitney-Bowes,
Inc. v. Mestre, 86 F.R.D. 444, 446 (S.D.Fla.1980)).
USX waives the privilege if it injects into the case an
issue that in fairness requires an examination of otherwise
protected communications. Id. In Conkling v. Turner,
883 F.2d 431, 434-35 (Sth Cir. 1989), the plaintiff
claimed that the RICO statute of limitations period was
tolled because he did not know that a statement made
by the defendants was false until told by his attorney 18
years after the fact. The Fifth Circuit held that by doing
so, he waived the privilege as to communications from
his attorney about the statement; “the attorney-client
privilege is waived when a litigant ‘place[s] information
protected by it in issue through some affirmative act for
his own benefit, and to allow the privilege to protect
against disclosure of such information would be mani-
festly unfair to the opposing party.’” Id. at 434 (quoting
Hearn v. Rhay, 68 F.R.D. 574, 581 (E.D.Wash.1975) )

6la

(alteration in original). See also Lorenz v. Valley Forge
Ins. Co., 815 F.2d 1095, 1098 (7th Cir.1987) (“To
waive the attorney-client privilege . . . a defendant must
do more than merely deny a plaintiff’s allegations. The
holder must inject a new factual or legal issue into the
case.”); Sedco Int'l S.A. v. Cory, 683 F.2d 1201, 1206
(8th Cir.) (“[B]y asserting fraud, [the defendant] .. .
waived his right to assert the privilege to prevent dis-
closure of communications which might have proven he
did not rely on [the plaintiffs’] statements.”), cert. denied,
459 U.S. 1017, 103 S.Ct. 379, 74 L.Ed.2d 512 (1982).
The defendant need not r

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386012_0678%3A2. Public record. Not legal advice.