Scivally v. Graney

Opinion

USCA1 Opinion

April 15, 1994        [NOT FOR PUBLICATION]

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

                                 ___________________

No. 93-2075

CHARLA SCIVALLY,

                                Plaintiff, Appellant,

                                          v.

                              WILLIAM R. GRANEY, ET AL.,

                                Defendants, Appellee.

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                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                       [Hon. Rya W. Zobel, U.S. District Judge]
                                           ___________________

                                 ___________________

                                        Before

                                 Breyer, Chief Judge,
                                         ___________
                            Cyr and Stahl, Circuit Judges.
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                                 ___________________

               Charla Scivally on brief pro se.
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               Diane M.  Kottmyer, Scott C. Moriearty,  Deborah Kravitz and
               __________________  __________________   _______________
          Bingham, Dana & Gould on brief for appellee.
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                                  __________________

Per  Curiam.   Appellant,  Charla Scivally,  appeals the
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            dismissal   of  her  amended   complaint  against  appellees,

            Polaroid  Corporation,  Israel   Booth,  William  Graney  and

            Vincent Tognarelli, to recover damages for alleged violations

            of  the Racketeer  Influenced and  Corrupt  Organizations Act

            [RICO],  18  U.S.C.     1964(c),  and  the  grant of  summary

            judgment  to  Graney  and  Tognarelli  on  appellant's  claim

            seeking relief for alleged violations   101(a)(2)  of Title I

            of the Labor-Management Reporting and Disclosure  Act [LMRDA]

            (codified at 29 U.S.C.   411(a)(2)).  We affirm.

                                          I

                 In  1946, Polaroid  established the  Polaroid Employees'

            Committee  [the committee]  to enhance  communication between

            employees and management.   Although its members were elected

            by  the employees, the committee was  treated as a department

            of Polaroid.  Polaroid paid salaries to the committee members

            and funded  all  committee activities.   From  1983 to  1992,

            Polaroid  registered the committee as a "labor organization,"

            pursuant to 29  U.S.C.    432.  Appellee  Graney was  elected

            Chairman of the  committee in 1989.  Appellee  Tognarelli was

            elected Vice Chairman the same  year.  Appellant Scivally was

            elected  to the  committee  as a  representative in  February

            1992.

                 Upon  her  election,  Scivally  sought  to  render   the

            committee   "more  responsive  to  its  membership  and  less

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subservient to  employer Polaroid."  After  failing to reform

            the  committee from within,  Scivally filed a  claim with the

            Department  of  Labor  [DOL]  asserting  that  the  committee

            officers  had been elected in  violation of 29  U.S.C.   481.

            In  June 1992,  the DOL  made preliminary  findings that  the

            manner  of  electing  the committee  officers  was  improper.

            Thereupon, Booth,  the President and Chief  Executive Officer

            of Polaroid,  announced the committee was  dissolved.  Graney

            and Tognarelli  in turn  filed a "terminal  report" notifying

            the DOL that the committee has been dissolved.  See 29 C.F.R.
                                                            ___

               402.5.  Upon receipt  of the report,  the DOL discontinued

            its investigation and dismissed  Scivally's complaint on  the

            ground  there  was no  longer  an entity  falling  within the

            Secretary's jurisdiction to investigate.   Scivally filed her

            complaint in the district court on July 9, 1992.

                                          II

                 Scivally's RICO claims are predicated on her  allegation

            that Polaroid and Booth acted illegally by paying "bribes" in

            the form of salaries and other payments to the members of the

            committee, in violation of  29 U.S.C.   186(a).   She alleges

            that Graney and Tognarelli  illegally accepted the bribes, in

            violation  of  29  U.S.C.     186(b).1    Since  the payments

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            1.  Section 186(a)  provides, inter  alia, that "it  shall be
                                          _____  ____
            unlawful for any employer  . . . to pay  . . . any money  . .
            .(3) to any employee or group or committee of employees . . .
            for  the purpose of causing such employees . . . to influence
            any  other employees in the exercise of the right to organize

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occurred over  several years, appellant alleges  a pattern of

            racketeering  activity.    She  asserts  five  categories  of

            injuries:  (1) lost  wages and  benefits the  committee would

            have negotiated if it had been free from employer domination;

            (2) financial loss from an  employee stock option plan [ESOP]

            in which she would not have participated if the committee had

            not been employer  dominated; (3) lost opportunity to run for

            office and vote in union  elections; (4) lost opportunity  to

            exercise her rights  as a member of a union  under Title I of

            the  LMRDA; and (5) the  loss of her  position as a committee

            representative.  The district  court dismissed all the counts

            for lack of standing.

                 In order  to establish standing under  RICO, a plaintiff

            must demonstrate that  she was "injured in  h[er] business or

            property" by  the alleged racketeering activity,  18 U.S.C.  

            1964(c), and that  the injury was  proximately caused by  the

            illegal  activity, Holmes  v. Securities  Investor Protection
                               ______     _______________________________

            Corp., 112  S.Ct. 1311,  1316-22 (1992).    To establish  the
            ____

            requisite proximate  cause, a RICO plaintiff  must show "some

            direct relation between the injury asserted and the injurious

            conduct."   Id. at 1318.  Since Scivally has failed to allege
                        __

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            and bargain collectively through representatives of their own
            choosing;  or (4)  to  any officer  or  employee of  a  labor
            organization . . . with intent to influence him in respect to
            any of his actions, decisions, or  duties as a representative
            of employees or  as such  officer or employee  of such  labor
            organization."   Section 186(b)  makes it unlawful  to accept
            any payment prohibited by subsection (a).

                                         -4-

sufficient facts  to show that her  injuries were proximately

            caused  (or in  some  cases caused  at  all) by  the  alleged

            illegal activity of appellees, we affirm the dismissal of her

            RICO complaints.

                 Scivally's complaint fails to allege sufficient facts to

            establish  that   appellees'  pattern  of  bribery   was  the

            proximate  cause of any loss of wages and/or benefits to her.

            Her  assumption that, if  the committee had  not existed, the

            employees would have established an independent  labor union,

            and that this union  would have negotiated a better  wage and

            benefit package than  the employees in fact obtained,  is too

            indirect and speculative to satisfy the standard of proximate

            cause.   See, e.g.,  Associated General Contractors,  Inc. v.
                     ___  ___    ____________________________________

            California  State Council  of Carpenters,  459 U.S.  519, 542
            ________________________________________

            (1983)   (plaintiff   whose   injuries  were   indirect   and

            speculative  does not have standing to sue under section 4 of

            the  Clayton  Act)  (applying  traditional   proximate  cause

            standards);  Holmes, 112  S.Ct.  at 1317  (reasoning used  to
                         ______

            require  showing  of  proximate cause  in  Associated General
                                                       __________________

            Contractors  "applies   just  as  readily  to      1964(c)").
            ___________

            Scivally's  alternate  contention--that  the employees  would

            have obtained better wages if no employee organization of any

            sort had existed--is similarly indirect and speculative.

                 Scivally  also alleges  that  she was  "cheated" out  of

            wages  and benefits by Polaroid's  adoption of an  ESOP.  The

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ESOP was established as a defense  against a hostile takeover

            attempt and its propriety  was challenged before the Delaware

            Court  of  Chancery.   Shamrock  Holdings,  Inc. v.  Polaroid
                                   ________________________      ________

            Corp.,  559 A.2d 257 (Del. Ch. 1989).  Scivally contends that
            ____

            Polaroid used its control over the committee to induce Graney

            and Tognarelli  to testify falsely before  the Delaware court

            about  employee  sentiment  toward  the ESOP  and  that  this

            testimony led the  court to  approve the ESOP.   She  alleges

            specifically  that Graney  and  Tognarelli falsely  testified

            that Polaroid  employees would work more  productively if the

            ESOP were adopted.  

                 The  record  belies  Scivally's   claim.    First,   the

            testimony of Graney and Tognarelli was only a small  fraction

            of  the evidence on which the Delaware court relied in making

            its findings.   Id. at 259 (in  making its summary of factual
                            __

            findings  court   drew  "from  over  3,000   pages  of  trial

            transcript,  more than  500  exhibits and  extensive excerpts

            from the  depositions of 34 witnesses").  Moreover, the court

            did not find  that the ESOP  would increase productivity  but

            only that it would not lead to "decreased productivity."  Id.
                                                                      __

            at 272.   Given these undisputed facts,  Scivally cannot show

            that the allegedly perjured testimony was the proximate cause

            for  the  court's  failure  to  set  aside  the  ESOP.    See
                                                                      ___

            Associated  General  Contractors,  459  U.S.  at  542  (since
            ________________________________

            alleged  injuries  may  have  been  produced  by  independent

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factors, plaintiff has not shown they were proximately caused

            by defendant's acts).

                 Scivally alleges  that the other  injuries she  suffered

            stem from the dissolution  of the committee.  Insofar  as the

            dissolution  marked  the  cessation  of   appellees'  alleged

            racketeering   activity,  any   injury   suffered  from   the

            dissolution was not caused by racketeering activity.  

                 Scivally, however,  also  alleges that  the  dissolution

            itself  could  not have  occurred  but  for the  racketeering

            activity of appellees Booth, Graney and  Tognarelli.  Even if

            this were so, appellant  cannot show that she was  injured in

            her business or property by the dissolution of the committee.

            According to  appellant's allegations, the committee  had for

            several years been funded  by the company in violation  of 29

            U.S.C.    186(a)  &  (b).    Since  the  committee  had  been

            supported by  the very racketeering activity  which forms the

            predicate acts of appellant's RICO complaint, the property to

            which Scivally alleges  injury--her rights to  participate in

            the  committee--would  not  have existed  absent  the illegal

            racketeering activity.  "Where, as here, the only property to

            which a  plaintiff alleges injury is  an expectation interest

            that  would  not  have  existed  but  for  the  alleged  RICO

            violation,  it would  defy logic  to conclude  the [causation

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requisite  to confer  RICO  standing] exists."2   Heinold  v.
                                                              _______

            Perlstein, 651 F. Supp. 1410, 1412 (E.D. Pa. 1987) (plaintiff
            _________

            who  entered  into  contract  because  of  allegedly  illegal

            activity of  defendant cannot  recover  for injury  sustained

            because he lost the benefit of the bargain).

                                         III

                 Scivally  alleges that  appellees Graney  and Tognarelli

            violated her right to free  speech and assembly, pursuant  to

            29  U.S.C.    411(a)(2),3 when  they dissolved  the committee

            without  consulting  its  membership.    The  district  court

            granted summary judgment to defendants.

                 Scivally cannot prevail on her   411(a)(2) claim because

            she  cannot  show  that  the  dissolution  of  the  committee

            interfered with any  right she possessed to  speak freely and

            associate  with  other  members  of   a  labor  organization.

            Scivally  alleges  that  the  committee  as  it  existed  was

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            2.  Similarly,  appellant  suffered no  cognizable  injury in
            being deprived of her rights to participate in an independent
            labor organization prior to the dissolution of the committee.
            On the  one hand,  absent the alleged  racketeering activity,
            the  committee  would  not  have  existed.    On  the  other,
            appellant  has  alleged  no  facts which  would  support  the
            conclusion  that  but  for Polaroid's  establishment  of  the
            committee,  Polaroid  employees  would  have  established  an
            independent labor union.  

            3.  According to 29 U.S.C.   411(a)(2):

                      Every member of  any labor organization  shall
                 have  the right  to meet  and assemble  freely with
                 other members; and to express any views, arguments,
                 or opinions . . .

                                         -8-

employer  dominated.     Employer  domination   of  a   labor

            organization is an  unfair labor practice in violation  of 29

            U.S.C.   158(a)(2).  Moreover, it has long been the policy of

            the National  Labor Relations  Board [NLRB] that  an employer

            dominated  union must  be  disestablished.4    See  Carpenter
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            Steel Co., 21 LLRM 1232, 1234 (1948)  ("Where we find that an
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            employer's unfair  labor practices have been  so extensive as

            to constitute domination of  the organization, we shall order

            its disestablishment . . . ") (stating NLRB policy); N.L.R.B.
                                                                 _______

            v.  Northeastern  Univ., 601  F.2d 1208,  1215 n.7  (1st Cir.
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            1979) ("the Board applies the theory that once domination has

            been shown, no remedy  short of complete disestablishment can

            ever be adequate").  While not necessarily requiring that the

            committee be  dissolved, an order to  disestablish would have

            required that Polaroid "cease to recognize [the committee] as

            the collective bargaining representative of [its] employees,"

            Swift & Co.  v. N.L.R.B., 106 F.2d  87, 95 (10th Cir.  1939),
            __________      _______

            and almost certainly would  have prevented the committee from

            ever being certified by the NLRB, see N.L.R.B. v. United Mine
                                              ___ _______     ___________

            Workers, 355  U.S. 453,  458 (1958) (upon  finding domination
            _______

            "Board usually  orders the  complete disestablishment  of the

            union so that it can never be certified by the Board again").

            In other words, upon disestablishment, the committee would no

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            4.  Scivally  concedes  that,  if  a  complaint  of  employer
            domination had been  brought before the NLRB, the  NLRB would
            have ordered the committee disestablished.

                                         -9-

longer have been a "labor organization" within the meaning of

            29 U.S.C.    402(i) & (j).5  However, the rights protected by

               411(a)(2), which  Scivally  alleges were  violated by  the

            dissolution,   belong   only   to   members   of   a   "labor

            organization."      Therefore, on the basis of Scivally's own

            allegations, even if Graney  and Tognarelli had not dissolved

            the committee,  the disestablishment  of the  committee would

            have been  necessary  to cure  an  unfair practice  and  that

            disestablishment would have  extinguished any rights Scivally

            had under   411(a)(2).  Since Graney and Tognarelli cannot be

            said   to  have  violated  a  right  which  would  have  been

            extinguished regardless of whether  or not they dissolved the

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            5.  According to  29 U.S.C.    401(i),  for  the purposes  of
            chapter 11 of Title 29:

"Labor    organization"    means    a    labor
                 organization  engaged  in  an   industry  affecting
                 commerce . . .
                  
            According to   401(j): 

                      A labor  organization shall  be  deemed to  be
                 engaged in an industry affecting commerce if it--

                        (1)  is  the  certified   representative  of
                      employees under the provisions of the National
                      Labor Relations Act . . . ; or
                        (2) although not certified, is a national or
                      international  labor  organization or  a local
                      labor organization recognized or acting as the
                      representative of employees of an  employer or
                      employers engaged in an industry affecting    
                      commerce. . . .

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committee, it was appropriate to grant them summary judgment.

Affirmed.
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