United Brotherhood of Carpenters & Joiners v. Building & Construction Trades Dep't

770 F.3d 834, 2014 WL 5438504, 201 L.R.R.M. (BNA) 3257, 2014 U.S. App. LEXIS 20667
CourtCourt of Appeals for the Ninth Circuit
DecidedOctober 28, 2014
DocketNo. 12-36049
StatusPublished
Cited by68 cases

This text of 770 F.3d 834 (United Brotherhood of Carpenters & Joiners v. Building & Construction Trades Dep't) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United Brotherhood of Carpenters & Joiners v. Building & Construction Trades Dep't, 770 F.3d 834, 2014 WL 5438504, 201 L.R.R.M. (BNA) 3257, 2014 U.S. App. LEXIS 20667 (9th Cir. 2014).

Opinion

OPINION

O’SCANNLAIN, Circuit Judge:

We must decide whether a labor union’s use of economic pressure is extortion under the Racketeer Influenced and Corrupt Organizations Act.

I

The Building and Construction Trades Department, AFL-CIO, (“Building Trades”) is an umbrella labor organization representing unions and individuals in the construction industry. Subordinate labor unions pay the Building Trades per capita monthly fees and must comply with the Building Trades’ rules. The United Brotherhood of Carpenters and Joiners of America (“Carpenters”) is no longer affiliated with the Building Trades because it believes that the Building Trades’ services are “unrequested, unwanted and unnecessary” and that its rules are “stale, outdated and anticompetitive.”1

This case concerns the “Push-Back-Carpenters Campaign,” a campaign of (at least) intense economic pressure orchestrated by the Building Trades to force the Carpenters into paying what it calls “monthly bloated per capita payments in perpetuity,” that is, into reaffiliating with the Building Trades and paying dues. Allegations of “economic pressure” include: promoting a 2008 AFL-CIO resolution authorizing the AFL-CIO to charter a union to compete with the Carpenters; the organization of a “Unity Rally” in St. Louis; repeated public criticism of the Carpenters on websites and in other publications; filing frivolous regulatory claims against the Carpenters; stealing confidential informa[837]*837tion; forcing the Carpenters’ Seattle legal counsel to terminate its relationship with the Carpenters; and orchestrating the June 2011 termination of an affiliation agreement (the “Solidarity Agreement”) between the Carpenters and the Metal Trades Department, AFL-CIO.

The Carpenters’ complaint also alleges acts of vandalism and threats of force, such as: vandalism of Carpenters’ job sites and property; death threats against Carpenters’ officials and representatives; threats of violence at Pier 66 in Seattle; and the public dissemination of video footage of a violent attack on Carpenters’ members.

Although the Carpenters have not acceded to the Building Trades’ demands, they allegedly have suffered significant harm, including: “lost members and dues, lost or reduced promotion, contractual and/or membership recruitment opportunities, lost job opportunities, positions and work assignments, loss of confidential information, increased costs due to the termination of contractual relations with its attorneys, and substantial and irreparable loss of goodwill.”

The Carpenters, together with six subordinate labor organizations and nineteen individual members, sued the Building Trades and three of its officers and agents: James Williams, Ron Ault, and David Molnaa.2 The Carpenters alleged nine claims, four under the Racketeer Influenced and Corrupt Organizations Act’s private cause of action (“civil RICO”), 18 U.S.C. § 1964(c), one under the Labor Management Reporting and Disclosure Act (“LMRDA”), 29 U.S.C. § 411(a)(5), and four under state law.

Concluding that the Carpenters failed to allege proximate causation or any predicate acts and also failed to join a necessary defendant to obtain injunctive relief under the LMRDA, the district court dismissed all of the Carpenters’ federal claims. See Fed.R.Civ.P. 12(b)(6). The court also declined to exercise supplemental jurisdiction over the state claims. Finally, although the Carpenters had not previously amended their complaint, the court declined to grant leave to amend on the ground of futility. The Carpenters timely appealed.

II

RICO provides a private cause of action for “[a]ny person injured in his business or property by reason of a violation of [18 U.S.C. § 1962].” 18 U.S.C. § 1964(c). Subsections 1962(a) through (c) prohibit certain “pattern[s] of racketeering activity” in relation to an “enterprise.” Subsection 1964(d) makes it illegal to conspire to violate subsections (a), (b), and (c) of section 1962.

“The elements of a civil RICO claim are as follows: (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity (known as ‘predicate acts’) (5) causing injury to plaintiffs business or property.” Living Designs, Inc. v. E.I. Dupont de Nemours & Co., 431 F.3d 353, 361 (9th Cir.2005) (internal quotation marks and citation omitted). “[R]aeketeering activity” includes, inter alia, “any act which is indictable” under the Hobbs Act, 18 U.S.C. § 1951, or “any act or threat involving ... extortion, ... which is chargeable under State law.” 18 U.S.C. § 1961(1)(A), (B).

The primary issue in this appeal is whether the Carpenters plausibly alleged [838]*838any predicate acts, under either the Hobbs Act or state extortion law.

A

“Extortion” under the Hobbs Act, “means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right.” 18 U.S.C. § 1951(b)(2). The Carpenters’ complaint alleges that the Building Trades applied intense economic pressure in an effort to force them to surrender their money and submit to Building Trades control.

Fear, in the context of the Hobbs Act, can include fear of economic loss. See, e.g., Levitt v. Yelp! Inc., 765 F.3d 1123, 1133-34 (9th Cir.2014); United States v. Greger, 716 F.2d 1275, 1278-79 (9th Cir.1983); Rennell v. Rowe, 635 F.3d 1008, 1012 (7th Cir.2011); Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494, 522 (3d Cir.1998) (“The term ‘fear’ includes the fear of economic loss.”). But “there is nothing inherently wrongful about the use of economic fear to obtain property.” United States v. Sturm, 870 F.2d 769, 773 (1st Cir.1989). “[T]he fear of economic loss is a driving force of our economy that plays an important role in many legitimate business transactions.” Brokerage Concepts, Inc., 140 F.3d at 523. Courts must therefore differentiate between legitimate use of economic fear— hard bargaining- — and wrongful use of such fear — extortion. See, e.g., George Lussier Enters., Inc. v. Subaru of New England, Inc., 393 F.3d 36, 50 (1st Cir.2004). “Distinguishing between hard bargaining and extortion can be difficult.” Rennell, 635 F.3d at 1011.

For guidance, courts have turned to United States v. Enmons,

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770 F.3d 834, 2014 WL 5438504, 201 L.R.R.M. (BNA) 3257, 2014 U.S. App. LEXIS 20667, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-brotherhood-of-carpenters-joiners-v-building-construction-ca9-2014.