United States v. International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America

120 F.3d 341, 155 L.R.R.M. (BNA) 2531

• Court: Court of Appeals for the Second Circuit
• Decided: June 11, 1997
• Docket: No. 898, Docket No. 96-6196
• Status: Published

Opinions

JOSÉ A. CABRANES, Circuit Judge:

Robert T. Simpson, Jr., appeals from the judgment of the United States District Court for the Southern District of New York (David N. Edelstein, Judge), United States v. International Bhd. of Teamsters (“Simpson”), 931 F.Supp. 1074 (S.D.N.Y. 1996). The district court affirmed a decision of the Independent Review Board (“IRB”), an investigative and disciplinary body established under the consent decree entered in United States v. International Bhd. of Teamsters, 88 Civ. 4486 (DNE) (S.D.N.Y. Mar. 14, 1989) (“Consent Decree”), a civil action filed by the United States under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1964 (the “RICO Action”).¹ The IRB found, inter alia, that Simpson brought “reproach” upon the International Brotherhood of Teamsters (“IBT”) and interfered with the legal obligations of IBT Local 743 (the “Local”), in violation of the IBT Constitution. The IRB based its conclusions on its factual findings that, on numerous occasions, Simpson allowed Donald Peters, a former IBT official, to act as a representative and agent of the Local and its funds, in violation of Peters’ personal settlement agreement (“Settlement Agreement”) with the United States in the RICO Action. As a sanction, the IRB barred Simpson from holding any position or obtaining any consulting or other work with the IBT or any IBT-affiliated entity. On appeal, Simpson argues that: (i) the district court erred in finding that the IRB’s opinion and decision was supported by substantial evidence, (ii) the district court erred in rejecting Simpson’s motion to recuse two IRB members, and (iii) the sanction imposed by the IRB was excessive. We find these arguments to be without merit.

I.

On February 19, 1988, Donald Peters announced to Local 743’s Executive Board (the “Board”) that, effective April 1, 1988, he was retiring as president of Local 743, the largest local chapter of the IBT, comprising over 21,000 members in the Chicago area. At the same Board meeting, the Board passed the following resolution regarding Peters (the “1988 Resolution”):

Upon his retirement, Donald Peters shall be named and designated as President Emeritus of Local 743 for his life and shall continue in addition to act as advisor and consultant to this Local Union.

To assist in his efforts in connection with his work as described above, Local 743 shall reimburse him for all related expenses he may incur, and shall make available at no cost, an office for his use on the premises of Local 743 with such furniture, equipment, services, publications and assistance, as is or may be deemed necessary and appropriate with all costs therefore to be paid by Local 743.

Peters recommended to the Board that he should become a Trustee of the Local effective April 1, 1988, thus remaining a member of the Local’s Board, and that Simpson, then Vice President of the Local, should replace him as President of the Local. Both recommendations were adopted by the Board.

Shortly thereafter, on June 28, 1988, the United States filed the RICO Action against the IBT, its General Executive Board (the “GEB”), the eighteen members of the GEB (including Peters, then still “Ninth Vice President” of the GEB), the Commission of La Cosa Nostra² and various asserted members and associates of La Cosa Nostra, alleging that La Cosa Nostra had dominated the IBT through a pattern of racketeering activity. On March 14, 1989, Peters entered into the Consent Decree and the Settlement Agreement, the latter of which required him to retire permanently from all positions as an offieer/trustee, agent, representative or employee of the IBT or of any IBT subordinate body. Peters resigned from his various IBT positions by September 1989, pursuant to the Settlement Agreement.

On June 30,1994, the IRB issued an investigative report to the IBT proposing disciplinary charges against Simpson, the president of Local 743 and an International Trustee of the IBT. The IRB recommended that the IBT file charges against Simpson for “bringing reproach upon the IBT and interfering with the Local’s legal obligations by allowing and condoning Donald Peters to continue to act as a representative of Local 743 and to incur expenses paid by the Local despite a prohibition against Peters acting in this capacity.”³

On July 5, 1994, the IBT referred the charges against Simpson to the IRB for adjudication, “[i]n accordance with past practice and in consideration of Mr. Simpson’s position as International Trustee.” On December 20 and 21, 1994, the IRB held a hearing on the charges against Simpson. At the hearing, the counsel to Chief Investigator Charles Carberry of the IRB⁴ submitted several volumes of documentary evidence against Simpson and orally summarized the evidence contained in these volumes. In response, Simpson testified in his own defense, presented the testimony of Marvin Gittler, the General Counsel of Local 743, and ten other witnesses, and submitted documentary evidence. See generally Simpson, 931 F.Supp. at 1081-89.

In a unanimous Opinion and Decision dated July 25, 1995, the IRB found that, following his September 1989 resignation, Peters continued to have an office on Local 743 premises, and that “[w]ith the assistance and approval of Simpson ... Peters continued to act as a representative and agent of Local 743.” The IRB stated that, as the principal officer of the Local, Simpson was obliged to “ensure that he and the Local did not assist Peters in violating the settlement agree-ment____” The IRB found, however, that Simpson “engaged in a pattern of conduct that allowed Peters to act as an agent and representative of Local 743 and its affiliated benefit funds.” Specifically, the IRB found that Simpson permitted Peters to participate as a Local 743 representative in a meeting between union officials and the Hospital Employees Labor Program, a program to organize hospital employees sponsored by Local 743 and a local of the Service Employees International Union. The IRB also found that Simpson, Peters and others met on three occasions in 1990 to discuss ongoing negotiations with the University of Chicago. In addition, Peters met with Simpson and the Chair of the Teamster Montgomery Ward Council, Gayle Crawford, “to discuss matters involving Montgomery Ward & Co.” The IRB found that Peters also continued the work he had performed as a trustee of the Local’s Health and Severance Funds, by representing the Local in “specific areas of investment performance, collections, resolution of particular benefits claim[s] and the definition of ... particular eligibility criteria” and by attending several meetings regarding the Funds. The IRB also relied on evidence that Peters had traveled to IBT functions on behalf of the Local following his forced resignation under the Settlement Agreement. For example, the IRB found that Peters was reimbursed for expenses relating to a trip with Simpson to St. Louis in 1990, to assist Simpson in his political campaign to become an International Trustee.⁵

The IRB rejected Simpson’s contention that Peters had acted merely “as a passive informational resource to Local officials or lawyers” — that Peters remained involved in union and Fund affairs only because he had information that no one else at the Local had. The IRB responded that, “[ejven if we were to credit Simpson’s reasons for Peters’ continuing activity on behalf of Local 743, to have allowed Peters to continue to have exclusive possession of pertinent information would reflect, on Simpson’s part, a willingness to permit Peters’ continuing active involvement with both the union and its funds.” In any event, the IRB pointed to several other individuals with the same knowledge and experience who could have provided the Local with any assistance it needed. The IRB also rejected Simpson’s claim that, under the Settlement Agreement, Peters was only barred from the positions of “business agent” or “business representative,” two specific union positions. Rather, the IRB concluded that “[t]he court-approved agreement set forth a broader prohibition, requiring Peters to permanently resign from all positions as an ‘agent’ or ‘representative’ of the IBT, any IBT subordinate body and any IBT affiliated benefit fund.” Furthermore, although Simpson claimed that he had relied on advice from the Local’s attorney, Marvin Gittler, that Peters’ continued involvement with the Local was permissible, the IRB found that

Simpson could not properly rely on Gittler for advice. Simpson knew that Gittler was Peters’ attorney in the civil RICO case---Simpson ... could not have reasonably relied upon Gittler’s statements concerning Peters’ ability to stay involved with the Local because Gittler was Peters’ attorney. Instead ... Simpson should have obtained advice from independent counsel....

For all these reasons, the IRB concluded that “it has been established by a preponderance of the evidence that Simpson brought reproach upon the IBT and interfered with the Local’s legal obligations by allowing Peters to act as a representative and agent of the Local.” The IRB determined that Simpson must resign as President of Local 743, and directed that he be permanently barred from holding any position with the IBT or any IBT-affihated entity in the future. The IRB also barred Simpson from obtaining employment, consulting or other work with the IBT or any IBT-affiliated entity.

On July 25, 1995, in accordance with the procedure set forth under the Consent Decree, the IRB submitted its Opinion and Decision with respect to Simpson to the district court for review. Simpson filed objections to the IRB’s application and moved to recuse two members of the IRB. On June 27, 1996, in a thorough opinion, the district court affirmed the IRB’s decision in all respects. Simpson, 931 F.Supp. at 1074. The court found, inter alia, that (i) the record fully supported the IRB’s determinations with respect to Simpson, id. at 1096; (ii) there was no need for any IRB member to recuse himself, and there was no evidence that the IRB was biased against Simpson, id. at 1099-1106; and (iii) the sanction imposed by the IRB was neither arbitrary nor capricious, id. at 1112-15.

This appeal followed.

II.

A. Standard of review.

Although we have not previously stated the precise standard of review applicable to a district court order, such as the one before us, that itself reviews an IRB proceeding under the Consent Decree, see, e.g., United States v. International Bhd. of Teamsters (“DiGirlamo”), 19 F.3d 816, 819-20 (2d Cir.), cert. denied, 513 U.S. 873, 115 S.Ct. 199, 130 L.Ed.2d 130 (1994); United States v. International Bhd. of Teamsters (“Cimino”), 964 F.2d 1308, 1311 (2d Cir.1992), the Consent Decree contains “an extremely deferential standard of review” of decisions of the IRB by the district court. DiGirlamo, 19 F.3d at 819-20. “The district court is to review decisions of the [IRB] under the same standard of review applicable to review of final federal agency action under the Administrative Procedure Act [“APA”].”⁶ Id. (internal quotation marks omitted). Accordingly, we have held that the district court is required to treat decisions of the IRB with “great deference.” Id. at 820. In any event, we need not determine the precise standard of review by the Court of Appeals at this time because we conclude, as we have on several occasions in the past, that the district court’s order should be affirmed under any arguably applicable standard of review. See id.; Cimino, 964 F.2d at 1311.

B. Substantial evidence supporting IRB opinion.

Simpson argues that the district court erred in finding that the IRB’s opinion was supported by substantial evidence, one standard of review derived from the APA. Substantial evidence is “something less than the weight of the evidence,” DiGirlamo, 19 F.3d at 820, but something “more than a mere scintilla,” Cimino, 964 F.2d at 1311-12. Substantial evidence includes “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Id. (internal quotation marks omitted). Accordingly, “the substantial evidence standard may be met despite the possibility of drawing two

U.S. V. INTERNATIONAL BROTHERHOOD OF TEAMSTERS 347

Cite as 120 F.3d 341 (2ndCir. 1997)

inconsistent conclusions from the evidence.” DiGirlamo, 19 F.3d at 820 (internal quotation marks omitted).

Simpson claims, specifically, that the IRB’s decision was not supported by substantial evidence because (i) the IRB and district court erroneously believed that the Settlement Agreement prohibited Simpson’s conduct; (ii) Simpson’s conduct could not have violated the Settlement Agreement because Judge Edelstein and IRB Member Frederick B. Lacey personally approved expenses for Peters and allowed Peters to attend IBT functions following his retirement; (iii) Chief Investigator Carberry was notified by Simpson in September 1991 of Local 743’s arrangements with Peters, yet Carberry failed to object to these arrangements for three years; and (iv) Simpson reasonably relied on the advice of Local 743’s counsel, Marvin Gittler, with respect to Local 743’s arrangements with Peters. We reject all of these claims for substantially the reasons stated by the district court. See Simpson, 931 F.Supp. at 1074.

[2] Simpson presses several arguments with respect to the Settlement Agreement. First, he contends that because the 1988 Resolution providing for an advisory and consulting role for Peters was drafted and filed before the Settlement Agreement was drafted and signed, it was unaffected by the Settlement Agreement. Second, he asserts that the language of the Settlement Agreement does not prohibit the advisory and consulting role for Peters set forth in the 1988 Resolution. These arguments are without merit. There is no doubt that the Settlement Agreement permanently barred Peters from acting as an “officer, agent, representative or employee of the IBT or any IBT subordinate body,” and the IRB specifically found that Simpson facilitated a representative and agency role for Peters going well beyond “advising and consulting.” As the district court noted, “Simpson completely has missed the thrust of both the disciplinary charges against him and the IRB’s stated findings regarding those charges.” Id. at 1099.

Simpson also argues that IRB Member Lacey and Judge Edelstein themselves al-

lowed Peters to use IBT funds in order to act in a representative capacity. However, the expenses to which Simpson refers were incurred when Peters functioned as chairman at an IBT golf tournament. There is no evidence that Peters on that occasion represented IBT interests or acted as an IBT agent on union business. Moreover, even if Peters had acted in such a fashion, there was no evidence to show that either Lacey or the district court had reason to know this in approving the expenses.

[3] Simpson’s argument that he is immune from sanctions because Chief Investigator Carberry knew for three years of certain of Simpson’s activities is likewise without merit. The Chief Investigator’s knowledge did not include the full range of activities the IRB relied upon in concluding that Simpson violated the IBT Constitution. Furthermore, Simpson has not brought to our attention any authority for the proposition that, if the Chief Investigator fails to bring charges immediately after learning of a violation, he is subsequently barred from bringing charges based on those violations. Similarly, it is completely irrelevant whether, as Simpson contends, he severed ties with Peters nearly a year before the charge in the instant case was brought against him.

C. Recusal of Lacey and Webster.

[4] Simpson argues also, in a claim that he failed to raise before the IRB, that the district court erred in refusing to disqualify IRB Members Lacey and William H. Webster, who, Simpson claims, were biased against him as a political opponent of IBT General President Ron Carey. We affirm the district court’s decision rejecting this claim for substantially the reasons stated therein. Simpson, 931 F.Supp. at 1099-1106. In particular, as the district court noted,

Simpson’s claim that the IRB is biased against him is based solely on Simpson’s speculation and conelusory allegations. Simpson has sought to conjure a claim that Lacey [and Webster are] biased against him from a series of inferences based on a

single sentence in the Puccio Letter⁷ that Simpson claims demonstrates that Lacey is biased in favor of Carey. From this one sentence, Simpson infers that Lacey is partial to Carey, that this alleged partiality makes Lacey biased against Simpson because of an alleged “falling out”, between Carey and Simpson, and that this alleged bias against him caused the IRB to take action against Simpson that the IRB otherwise would not have taken.

Id. at 1106 (footnote added). Assuming for the argument only that Simpson did not waive his claim of bias by failing to raise it before the IRB, we believe that, in light of the attenuated, if not strained, nature of Simpson’s claim that Lacey and Webster are somehow biased against Simpson, the district court properly concluded that there was no need for Lacey and Webster to recuse themselves from consideration of Simpson’s case.

D. Proportionality of sanctions against Simpson.

Simpson argues, in essence, that the penalty imposed — permanently barring him from holding office in the IBT — was arbitrary and capricious because the penalty, in his view, is harsher than that imposed in other, similar IBT disciplinary proceedings.

The district court properly applied the “arbitrary and capricious” standard in reviewing the penalty imposed against Simpson. See, e.g., United States, v. International Bhd. of Teamsters (“Wilson ”), 978 F.2d 68, 73 (2d Cir.1992) (“The district judge derives his authority ... from the [Consent Decree], which incorporates the APA standards of review ... [namely that] a reviewing court may set aside final agency action only if it is arbitrary and capricious____”). We have also stated that “[t]he reviewing court should not overturn the [IRB]’s choice of sanctions unless it finds the penalty unwarranted in law or without justification in fact.” Id. (internal quotation marks omitted).

Simpson argues here, as he did before the district court, that the IRB “permanently barred” him from the IBT and that “[i]n all the other cases in which the district court affirmed permanent bans by the IRB or its predecessor the Independent Administrator, the wrongdoing has been far more egregious.” In each of the cases cited by Simpson, however, the penalty imposed was more severe than the penalty imposed against Simpson — that is, the IBT member was permanently barred from membership in the IBT. Simpson, on the other hand, was not barred from membership in the IBT, but only from holding office or acting as an agent on behalf of the IBT. As the district court stated, “[b]ecause the IRB neither ‘banished,’ ‘barred,’ nor ‘debarred’ Simpson from the IBT, nor specifically stripped him of his Union membership, Simpson retains his membership in the IBT, and consequently, the ability to make a living working as a rank- and-file Teamster.” Simpson, 931 F.Supp. at 1112-13.

Simpson also relies on United States v. International Bhd. of Teamsters (“Friedman ”), 838 F.Supp. 800 (S.D.N.Y.1993), aff'd without opinion, 33 F.3d 50 (2d Cir.1994). Simpson argues that, although the IBT officers in Friedman were guilty of more egregious conduct than Simpson’s, they received less severe penalties than he.

As Simpson notes, the Friedman case appears to be similar to the instant case— involving, as this case does, officers who permitted an offending Teamster, Harold Friedman, to continue to exercise authority over the affairs of a Local notwithstanding Friedman’s suspension from the Local. Id. at 802. Those officers, however, were only barred from holding a position with the IBT for a period of eighteen months, id. at 817, a significantly less severe sanction than the lifetime ban on office-holding that Simpson received.

We believe, however, that Friedman is distinguishable from the instant ease. In that case, Friedman was serving a one-year suspension and a three-year statutory bar from serving as an officer or trustee in the IBT or from acting as a consultant or advisor to any labor organization at the time the officers permitted him to continue to exercise influence and authority over the local union. See id. at 804. In the instant ease, Donald Peters was barred for life from holding office or acting as an agent or representative in the IBT at the time of Simpson’s offenses. We believe that the IRB could readily conclude that Simpson’s misconduct, in permitting Peters to continue to act on behalf of Local 743 notwithstanding the severe sanction imposed against Peters, was more culpable than that of the officers in Friedman.

Furthermore, as Simpson himself has proudly stated, he was a very high level member of the IBT — serving as the president of the largest local in the IBT and as an International Trustee of the IBT. In contrast, the officers in Friedman had not attained comparable levels of authority within their local, much less within the IBT. It was well within the IRB’s discretion to conclude that, precisely because Simpson was a trusted, high-level official in the IBT, his conduct, in allowing Peters to continue to play a large role in the affairs of Local 743, was more culpable.

Accordingly, we agree with the district court’s determination that the penalty imposed by the IRB against Simpson was not arbitrary and capricious.

III.

We find all of Simpson’s arguments to be without merit. We hold that

(1) The district court properly found that the IRB’s decision in this case was supported by substantial evidence.

(2) There was no need for IRB members Lacey and Webster to recuse themselves from consideration of the charges against Simpson.

(3) The penalty imposed against Simpson was not arbitrary and capricious.

Accordingly, the judgment of the district court is affirmed.

1 . We have summarized the history of the RICO Action in several prior opinions of this Court. See, e.g., United States v. International Bhd. of Teamsters ("1991 Election Rules "), 931 F.2d 177, 180-81 (2d Cir.1991). We assume familiarity with this history.

The district court entered the order in this case as part of its continuing oversight of the implementation of the Consent Decree between the United States and the IBT that resolved the RICO Action. The Consent Decree instituted sweeping structural reforms of the IBT's electoral and disciplinary processes, including the creation of the IRB. See, e.g., United States v. IBT ("Friedman & Hughes"), 905 F.2d 610, 613 (2d Cir.1990); United States v. IBT ("IRB Rules "), 998 F.2d 1101, 1105-06 (2d Cir.1993).

The IRB consists of three members, one chosen by the Attorney General of the United States, one chosen by the IBT, and a third person chosen by the two other IBT designees. The current IRB members are Grant Crandall, Frederick B. Lacey, and William H. Webster. The IRB has broad disciplinary and investigatory powers. See United States v. International Bhd. of Teamsters, 842 F.Supp. 1550, 1551 (S.D.N.Y.1994). The IRB uses its investigatory power, inter alia, "to investigate allegations of corruption within the IBT, allegations of influence by La Cosa Nostra or other organized crime groups upon IBT members or activities, and any failure of IBT members or leadership to cooperate fully with the IRB.” Id. at 1551-52. If the IRB finds what it believes is impermissible conduct, it recommends that the IBT file disciplinaty charges against those allegedly engaging in this conduct. Id. at 1552. In certain circumstances, the IRB is authorized to hold hearings to determine what action is necessary to correct the problems specified in the disciplinary charges. Decisions of the IRB are subject to review by the district court.

2 . According to the complaint filed in the RICO Action, the Commission of La Cosa Nostra (the "Commission”) is the national ruling council of La Cosa Nostra, an organized criminal group headquartered in New York City. The Commission consists of the "Bosses” and/or "Acting Bosses” of the five New York La Cosa Nostra Families (Bonanno, Colombo, Gambino, Ge-novese, and Lucchese).

3 . The IRB recommended the following specific charges against Simpson:

From October 1989 to the present, while the principal officer of Local 743, you allowed and facilitated Donald Peters' continued representation of Local 743 and his continued involvement in IBT affairs, thereby bringing reproach upon the IBT and interfering with the Local's legal obligations in violation ... of the IBT Constitution to wit:

As a result of the court-approved settlement agreement entered into by Donald Peters on March 14, 1989 ..., effective June 1, 1989 Donald Peters was prohibited from “any position as an officer, agent, representative or employee of the IBT or any IBT subordinate body....” Based upon this same court-approved settlement agreement, effective September 30, 1989 Donald Peters was prohibited from "all positions as a trastee, agent, representative or employee of any IBT-affiliated employee benefit fund....”

Despite these prohibitions on Donald Peters’ involvement with Local 743 and any other IBT entity, subsequent to October 1, 1989, you allowed Donald Peters to act as a representative of Local 743 and to be involved in the affairs of Local 743 and other IBT entities. Such conduct included, but was not limited to, the following: providing Peters an office on Local 743 premises; allowing Peters to address a rally in 1990 of Local 743 members and a Local 743 shop stewards meeting in 1991; approving a resolution which authorized Local 743 to pay for Peters' expenses while he traveled representing Local 743; allowing Local 743 to pay for expenses in connection with meetings attended by you, Peters and others where union business was discussed; permitting Local 743 to pay for Peters’ hotel expenses at the 1991 IBT Convention in Orlando, Florida; and condoning Peters’ presence at the 1993 Central Conference of Teamsters Convention in Las Vegas, Nevada.

4 .The Chief Investigator of the IRB is in charge of executing the investigatory functions of the IRB.

5 . In addition, the IRB found that

1.SimpsonL] in violation of ... the Local 743 Bylaws, failed to conduct a required investigation of Peters after the filing of the civil RICO case in June 1988. See United States v. IBT [Sansone], 981 F.2d 1362, 1368 (2d Cir. 1992) ("Every IBT ‘officer is a fiduciary with respect to the Union members,' and has a 'duty to disclose and remedy wrongdoing within the IBT.' ” ... )

2. Simpson voted to award Peters a car at the Local's expense in violation of ... the Local’s Bylaws which provided that title to the car must remain in the name of the Local.

3. Simpson permitted Peters, who did not act as a business representative while a Trustee, to be paid $100,000, more than the other Trustees ....

6 . Under the APA, in order for a reviewing court to "set aside agency action, findings, and conclusions,” it must find that the agency's findings and conclusions are

(A) arbitraiy, capricious, an abuse of discretion, or otherwise not in accordance with law;

(B) contrary to constitutional right, power, privilege, or immunity; (C) in excess of statu-toiy jurisdiction, authority, or limitations, or short of statutory right; (D) without observance of procedure required by law; (E) unsupported by substantial evidence ... or (F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court.

5 U.S.C. § 706(2).

7 . The “Puccio Letter” is a letter Lacey wrote to a Thomas P. Puccio, who had threatened to “go public” with information he allegedly had with respect to Ron Carey’s ties to the Mafia. In the Puccio Letter, Lacey stated that he had told Puccio "that I thought you ... ought to have in mind what would happen if you brought Carey down in that there were ‘old guard’ Teamsters throughout the country that were hoping that Carey would be eliminated as a candidate in 1996 so that the clock could be turned back to what it was when I first came on the scene as Independent Administrator.”