USCA1 Opinion
April 15, 1994 [NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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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]
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Before
Breyer, Chief Judge,
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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
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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.
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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
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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
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Corp., 112 S. Ct. 1311, 1316-22 (1992). To establish the
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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).
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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.
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California State Council of Carpenters, 459 U.S. 519, 542
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(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
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require showing of proximate cause in Associated General
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Contractors "applies just as readily to 1964(c)").
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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
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Corp., 559 A.2d 257 (Del. Ch. 1989). Scivally contends that
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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
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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.
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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
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Associated General Contractors, 459 U.S. at 542 (since
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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.
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Perlstein, 651 F. Supp. 1410, 1412 (E.D. Pa. 1987) (plaintiff
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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 . . .
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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.
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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),
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and almost certainly would have prevented the committee from
ever being certified by the NLRB, see N.L.R.B. v. United Mine
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Workers, 355 U.S. 453, 458 (1958) (upon finding domination
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"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.
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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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