Andrea Doreen Ltd. v. Building Mat. Loc. Union 282

299 F.Supp.2d 129

ANDREA DOREEN LTD., Dorothy Loguidice, J.C.S. Enterprises, Inc., Jack C. Stuart, J.C.S. Construction Co., Inc., Conroc Recycling Corp., Michael Loguidice, Ultimate Demolition, Inc., and Paul Scaglione, Plaintiffs, v. BUILDING MATERIAL LOCAL UNION 282, affiliated with the International Brotherhood of Teamsters, Tom Gesualdi, Paul Gattus, Dennis Gartland, Sr., Gary Labarbera, Lawrence Kudla and Others as Trustees and Fiduciaries of Local 282 Welfare, Pension, Annuity, Job Training, Vacation and Sick Leave Trust Funds, Defendants.

No. CIV.A. 98-4838-WGY.

United States District Court, E.D. New York.

January 27, 2004.

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L. Susan Slavin, Slavin, Angiulo & Horowitz, LLP, Jericho, NY, Steven M. Coren, Coren & Braun, P.C., New York, NY, Anthony V. Barbiero, Anthony V. Barbiero, P.C., East Islip, NY, Robert G. Lipp, Franklin & Gringer, P.C., Garden City, NY, L. Susan Slavin, for Andrea Doreen, Ltd., Dorothy Loguidice, Plaintiffs.

William K. Wolf, Michael Bauman, Erinn Weeks Waldner, Friedman & Wolf, Bruce S. Levine, Rachel S. Paster, Cohen Weiss and Simon, New York City, NY, for Defendants.

MEMORANDUM AND ORDER

WILLIAM G. YOUNG, District Judge.¹

I. INTRODUCTION

The Plaintiffs, Andrea Doreen Ltd., Dorothy Loguidice, J.C.S. Enterprises, Inc., Jack C. Stuart, J.C.S. Construction Co. Inc., CONROC Recycling Corp., Michael Loguidice, Ultimate Demolition, Inc. and Paul Scaglione (collectively "Doreen") brought suit under the Racketeer Influence and Corrupt Organization Act, 18 U.S.C. § 1961 et seq. ("RICO"), against Building Material Local Union 282 ("Local 282") and the Trustees and Fiduciaries (the "Trustees") of Local 282's Welfare, Pension, Annuity, Job Training, Vacation and Sick Leave Trust Funds (the "Funds") (collectively the "Defendants"). This memorandum and order addresses the summary judgment motions made by the Trustees and Local 282 [Doc. Nos. 318, 324]. Pertinent to resolution of these matters, however, are (1) the arbitration decision, confirmed by this Court, regarding one of Local 282's counterclaims in the instant RICO action, Andrea Doreen, Ltd. v. Building Material Local Union 282, 250 F.Supp.2d 107 (E.D.N.Y.2003); and (2) the Court's findings and rulings and Doreen's admissions in a prior action brought by the Trustees against Doreen, King v. JCS Enterprises, Inc., No. 94-4604 (E.D.N.Y. filed Sept. 30, 1994) (the "ERISA Collection Action").²

II. BACKGROUND

A. Procedural History

On March 22, 1995, Building Material Local Union 282 ("Local 282") entered a consent decree with the United States Government, acknowledging that it, and certain of its members, had acted as a criminal enterprise, in conjunction with organized crime. Amended Consent Judgment, Levine Decl. Tab 3, at 1 (noting that the original Consent Judgment was ordered by the District Court on or about March 22, 1995). The consent decree enjoined Local 282 from engaging in further criminal and racketeering misconduct. Local 282's Mem. in Supp. of Mot. for Summ. J. [Doc. No. 326] ("Local 282's Mem. in Supp.") at 4; Amended Consent Judgment, Levine Decl. Tab 3.

Between 1994 and 1996, the Trustees initiated four separate actions under section 502 of ERISA to collect fringe benefit contributions allegedly owed to the Funds by Doreen under a Collective Bargaining Agreement. Local 282's Mem. in Supp. at 10.³ The four collection actions were consolidated under the ERISA Collection Action, No. 94-4604. In the first half of 1998, the Trustees and Doreen completed discovery in the ERISA Collection Action, and the Trustees moved for summary judgment. Doreen then brought this related RICO action before the Court, No. 98-4838, against Local 282 and the Trustees under 18 U.S.C § 1962(c).⁴ In this action, Doreen alleges, inter alia, that the ERISA Collection Action was brought against it as part of a criminal extortion conspiracy and "a sham to retaliate against Doreen." Pls.' Mem. in Opp'n to Summ. J. [Doc. No. 337] ("Pls.' Mem. in Opp'n") at 3, 15, 22. In essence, Doreen claims that Local 282 and the Trustees have — during the time that the consent decree has been in place — engaged in a criminal conspiracy to retaliate against Doreen and put Doreen out of business for refusing to make unlawful payments. Id. at 3; see Doreen, No. 98-4838, 4-5 (E.D.N.Y. July 31, 2000) (order dismissing certain claims) [Doc. No. 170]; Local 282's Mem. in Supp. at 2.

On September 11, 2000, Local 282 filed a counterclaim against Doreen in the RICO action to collect wages that were allegedly past due to drivers under the Collective Bargaining Agreement. Local 282's Mem. in Supp. at 14, 10.⁵

On June 15, 2001, Local 282 moved for partial summary judgment and for an order to compel arbitration on the question of whether Doreen failed to pay proper wages [Doc. No. 230]. Doreen, on the same day, moved to dismiss Local 282's counterclaim based on laches, waiver, failure to meet a condition precedent, and lack of obligation under the Collective Bargaining Agreement to arbitrate [Doc. No. 231]. Pls.' Reply Mem. [Doc. No. 241] at 4.

Despite Doreen's arguments and defenses against arbitration, at the June 22, 2001 hearing, Judge Platt granted Local 282 partial summary judgment and directed Local 282 and Doreen to proceed to arbitration on all issues involved in this case, except the remaining RICO claim. Hearing Tr. [Docket 256] at 9-10, 14 (5/22/01). The arbitration order did not include the Trustees' claims in the ERISA Collection Action. Oct. 18, 2001 Letter from Judge Platt [Doc. No. 272].

On June 28, 2002, Arbitrator Richard Adelman issued an Opinion and Award finding Doreen liable for failing to pay wages due its drivers under the Collective Bargaining Agreement. Arbitration Opinion and Award, Tab 1 to Levine Decl. [Doc. No. 327], at 2, 15. Because the parties had agreed to bifurcate liability from remedy, id., damages were not assessed at the time.

On July 1, 2002, the Trustees and Local 282 separately moved for summary judgement in the instant RICO case. On July 25, 2002, Doreen opposed this motion. On September 30, 2002, this Court held a summary judgment motion hearing via video conference⁶ and took the matter under advisement.

On March 3, 2003, this Court confirmed the Arbitration Award and Opinion and directed Arbitrator Adelman to proceed to the remedy phase of the arbitration as quickly as possible. Doreen, 250 F.Supp.2d at 116.

From May 12 through May 16, 2003, this Court conducted a bench trial in the related ERISA Collection Action, King v. JCS Enterprises, Inc., No. 94-4604. The relevant findings and rulings of the Court are that: (1) the defendants in the ERISA Collection action case, Doreen, manifested an intent to adopt the Collective Bargaining Agreement for the period of 1993-1996 notwithstanding that no agreement was signed. Trial Tr. Vol. 5 at 556:11-17 (5/16/03); (2) the Trustees proved that Doreen failed to maintain adequate records as matter of law and as such violated ERISA, Section 209, 29 U.S.C. § 1059. Id. at 558:1-6;(3) Doreen waived the written demand requirement found in the Collective Bargaining Agreement "by [its] conduct in urging the joint review of ... the records in the course of these proceedings, the conduct that led up to the KPMG report." Id. at 559:1-15 (remarking that "statutory requirements of such payments into pension funds by ERISA cannot be frustrated by the Trustees' failure strictly to follow the requirements of the Collective Bargaining Agreement");⁷ (4) the Trustees proved that Doreen failed to made adequate contributions to the pension plans as required by the governing Collective Bargaining Agreement. Id. at 558:15-25; and (5) the KPMG report is an adequate and reasonable basis for concluding what sums are owed by Doreen. Id. at 561:20-24.⁸ Following the conclusion of the trial, Doreen moved for reconsideration of the Court's prior findings that the KPMG report was an adequate and reasonable basis for determining the sums owed.⁹ The Court denied this motion. Subsequently, the parties agreed that Doreen owed the Trustees a sum of $108,108 in delinquent contributions plus interest, additional interest or liquidated damages, and attorneys fees and costs, as calculated under the requirements of ERISA Section 502(g)(2), 29 U.S.C. § 1132(g)(2). 7/11/03 Barbiero Letter; 7/15/03 Bauman Letter. The Court adopted this agreement, applied a six percent interest rate to the amount and entered judgment that JCS, Andrea Doreen, and Conroc, jointly and severally, and Michael Loguidice and Dorothy Loguidice, individually, are liable to the Trustees for the amount of $204,662 plus attorneys fees and costs. King v. JCS Enterprises, 288 F.Supp.2d 287, 291 (E.D.N.Y.2003).

B. Doreen's RICO Claims and Supporting Facts

Because Local 282 and the Union moved for summary judgment, the following facts are presented in the light most favorable to Doreen and all reasonable inferences are drawn in Doreen's favor. Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Sutera v. Schering Corp., 73 F.3d 13, 15 (2d Cir.1995) (citations omitted).

Doreen claims that Local 282 and the Trustees violated 18 U.S.C. § 1962(c) by conducting an enterprise through a pattern of racketeering activity. Am. Compl. [Doc. No. 137] at 21. More specifically, it claims that the Defendants engaged in a pattern of extortion, threats, damage to property, illegal union activity and systematic mail and wire fraud directed against Doreen because Doreen refused to pay bribes "or otherwise play ball" with them. Pls.' Mem. in Opp'n [Doc. No. 337] at 22. Doreen's main theory is that Local 282 used its relationship with the Trustees and the Trust Funds to create a false appearance of legality for these acts by falsely asserting that Doreen was in arrears on fringe benefit payments (and had not paid such deficiencies)...