Union Officers Can No Longer Hold Office; Failure to Investigate Organized Crime Is Cited;
UNITED STATES OF AMERICA v. MASON TENDERS DISTRICT COUNCIL OF GREATER NEW YORK, et al.

SUMMARY U.S. District Court: S.D.N.Y. Administrative Law

TWO FORMER union officers of the Mason Tenders District Council appealed the decision of a court-appointed monitor. The monitor held that appellants failed to investigate the presence of organized crime within their organization and to take any remedial action. Based on that conclusion, the monitor permanently barred appellants from holding office at the MTDC or any of its affiliated entities. The court noted that a union officer's fiduciary duty to investigate corruption and to take remedial measures arises when that officer knows or should know about corruption within his union. The court found that appellants' duty was triggered, along with several other "red flags," by their knowledge of their father's conviction, which revealed his involvement with the Gambino Family boss in a labor payoff scheme. The court affirmed the monitor's decision.
 
Judge Sweet
 
[Footnotes Deleted for Publication]

UNITED STATES OF AMERICA v. MASON TENDERS DISTRICT COUNCIL OF GREATER NEW YORK, et al. QDS:02762321 - Joseph M. Giardina and Lawrence P. Giardina (the "Giardinas" or the "Appellants") have appealed the April 7, 1999 decision (the "Opinion") of the Monitor appointed pursuant to the order entered by the Court in United States v. Mason Tenders District Council, 94 Civ. 6487 (S.D.N.Y.) on December 24, 1994, and modified on May 11, 1995 (the "Consent Decree").

The basic facts of this proceeding are set forth in greater detail in several prior opinions of the Court, familiarity with which is assumed. See United States v. Mason Tenders Dist. Council, No. 94 Civ. 6487, 1997 WL 97836 (S.D.N.Y. Mar. 6, 1997) ("Lanza"); United States v. Mason Tenders Dist. Council, No. 94 Civ. 6487, 1997 WL 345036 (S.D.N.Y. June 20, 1997) ("Messana"); United States v. Mason Tenders Dist. Council, No. 94 Civ. 6487, 1997 WL 340993 (S.D.N.Y. June 20, 1997) ("Wasnofski"). Those facts relevant to the instant opinion are set forth below.

For the reasons set forth below, the Opinion is affirmed.
 
The Opinion

The Opinion was rendered in connection with the administration of the Mason Tenders District Council of New York ("MTDC") and its affiliated entities under the terms of the Consent Decree, which provided for the appointment of an Investigations Officer with the power to bring disciplinary charges.

In the Opinion, the Monitor adopted two disciplinary charges out of a total of eleven charges that were submitted against Appellants by the Investigations Officer. After pre-hearing submissions, two days of hearings consisting of both testimony and legal argument, and post-hearing submissions, the Monitor concluded that the Giardinas had breached their duty to act in the best interests of their membership by guarding their union against corruption. Specifically, the Monitor held that the Giardinas, while officers of Mason Tenders Local 23 ("Local 23"), failed to investigate the presence of organized crime within their local and to take any remedial action. Based on that determination, the Monitor permanently barred the Giardinas from holding office at the MTDC or at any of its affiliated local unions or entities.
 
Factual and Procedural Background

Louis Giardina, the father of the Giardinas and a member of the Gambino organized crime family, served as the Business Manager of Local 23 until mid-1987. See Investigations Officer v. Louis Giardina, Opinion of the Monitor (Nov. 4, 1996). In 1986, Louis Giardina was indicted and subsequently convicted on racketeering charges, and his connection to the Gambino family became a matter of public record. See United States v. Daly, 842 F.2d 1380 (2d Cir. 1988). Specifically, Giardina was convicted of transmitting illegal labor payoffs from Steamfitters Local Union 638 to Paul Castellano, then the "boss" of the Gambino organized crime family. See Daly, 842 F.2d at 1389.

Both Giardinas were aware of their father's indictment and the nature of the charges against him. During Louis Giardina's criminal trial, Joseph Giardina was the President of Local 23 and remained in that position until mid-1987, when Local 23 had its regularly scheduled elections. Joseph Giardina replaced his father as Business Manager in mid-1987. Lawrence Giardina became Local 23 President when Joseph Giardina became Business Manager.

Also in 1987, Joseph Delmonico ("Delmonico") was elected to hold the position of Local 23 Business Organizer, a position supervised by Joseph Giardina. Delmonico, who had not held union office before, was an associate of the Gambino organized crime family. As was established by the Investigations Officer in proceedings against Delmonico, as Business Organizer Delmonico proceeded to appoint various relatives and associates of well-known organized crime figures to shop steward positions at Local 23 job sites.

The individuals appointed by Delmonico included John Gotti's brother, Vincent Gotti, and his nephew, Peter Gotti. Also appointed to a shop steward position was Giacomo Giordano, the son of Jack Giordano, a co-defendant in Louis Giardina's criminal trial. See Daly, 842 F.2d at 1380. Delmonico also appointed Jerry Garafola, the nephew of Salvatore "Sammy the Bull" Gravano, to a shop steward position, as well as Norman Dupont, the "coffee boy" at John Gotti's Ravenite Social Club. The Giardinas admittedly did not undertake any investigation into the possibility of organized crime influence within their local union.

On April 7, 1999, the Monitor concluded that the evidence supported Charges Eight and Nine against the Giardinas, and that they had breached their fiduciary duty by failing to investigate whether there was an organized crime influence within Local 23 and neglecting to take any appropriate remedial measures.

The Giardinas appealed the Monitor's decision to this Court, and the instant appeal was deemed fully submitted on December 1, 1999.
 
The Standard Of Review

Under the terms of the Consent Decree, charges brought by the Investigations Officer are to be adjudicated pursuant to a "just cause" standard. See Consent Decree P 7(c)(1). Just cause for discipline is established when the Investigations Officer proves his charges by a preponderance of the evidence. See Lanza, 1997 WL 97836, at *3.

The Consent Decree provides that decisions of the Monitor shall be final and binding, subject to this Court's review. See Consent Decree P 4(g). In reviewing decisions of the Monitor, the Court applies the same standard applicable to review of final federal agency actions under the Administrative Procedure Act (the "APA"), 5 U.S.C. @ 701 et seq.; See Consent Decree P 4(g)(2).

Under section 10(e) of the APA, a reviewing court determines de novo "all relevant questions of law." 5 U.S.C. @ 706; see Lanza, 1997 WL 97836 at *6; United States v. District Council, 941 F. Supp. 349, 361 (S.D.N.Y. 1996). In considering a relevant question of law under the APA, "the reviewing court asks whether the agency's action was 'arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.'" District Council, 941 F. Supp. at 362 (quoting 5 U.S.C. @ 706(2)(A)).

An agency's findings of fact "are entitled to affirmance on review if they are reasonable and supported by substantial evidence in the record as a whole." District Council, 941 F. Supp. at 362 (quoting NLRB v. Gridon, 792 F.2d 29, 32 (2d Cir. 1986)). The APA "permits agency findings to be set aside only if they are 'unsupported by substantial evidence.'" United States v. International Bhd. of Teamsters, 964 F.2d 1308, 1311 (2d Cir. 1992). Substantial evidence is more than a mere scintilla, id. at 1311-12, but "something less than the weight of the evidence, and the substantial evidence standard may be met despite the possibility of drawing two inconsistent conclusions from the evidence." United States v. International Bhd. of Teamsters, 19 F.3d 816, 820 (2d Cir. 1994) (citations omitted).

In sum, under the APA the scope of review is narrow, and the reviewing court must only make certain that the agency has examined the relevant data and articulated a satisfactory explanation for its action, including a rational connection between the facts found and the choice made. See Motor Vehicle Mfrs. Ass'n. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983); accord Henley v. FDA, 77 F.3d 616, 620 (2d Cir. 1996); Lanza, 1997 WL 97836, at *7. The district court is not to substitute its own judgment for that of the agency. See Henley, 77 F.3d at 620; see also United States v. International Bhd. of Teamsters, 981 F.2d 1362, 1368 (2d Cir. 1992) (explaining that "the district court must give 'great deference' to the decisions of the Independent Administrator") (quoting United States v. International Bhd. of Teamsters, 970 F.2d 1132, 1137 (2d Cir. 1992)).
 
The Monitor's Decision Was Neither Arbitrary Nor Capricious

Under established law, the Giardinas had a duty to investigate the possibility of an organized crime presence at Local 23. See, e.g., United States v. International Bhd. of Teamsters, No. 88 Civ. 4486(DNE), 1991 WL 243292, at *3 (S.D.N.Y. Nov. 8, 1991) (holding that "IBT officers are fiduciaries with respect to union members and have a duty to investigate and remedy corruption in the union"); United States v. International Bhd. of Teamsters, 792 F. Supp. 1346, 1352-53 (S.D.N.Y. 1992) ("Sansone") (same), aff'd, 981 F.2d 1362 (2d Cir. 1992). The duty to keep the union free from the presence of organized crime is particularly rigorous. Indeed, as the Honorable David N. Edelstein explained in Sansone, union officers:

must, with unstinting effort and steely resolve, wage an active campaign to purge the Union of the hideous influence of organized crime.

792 F. Supp. at 1353; see United States v. International Bhd. of Teamsters, 829 F. Supp. 608, 617 (S.D.N.Y. 1993) ("Raimondi") ("It is now well settled that when confronted with allegations that an IBT officer is associated with organized crime, other officers and trustees of the Local must investigate and take appropriate remedial action."). In sum:

When [a union] ... officer knows, or should know, that a fellow officer or IBT member engaged in criminal activity and/or has ties to ortanized crime, "[a union] officer will discharge his or her fiduciary duty only by employing whatever means are necesary to verify or refute the information and the implementing appropriate remedial measures."

United States v. International Bhd. of Teamster, 803 F. Supp. 748, 755 (S.D.N.Y. 1992) ("Coli') (citations omitted).

As the Monitor properly found in this case, the fiduciary duty described in the Teamsters cases applies with equal force to officers of the Mason Tenders union. See Investigations Officer v. Salvatore Lanza, Amended Opinion of the Monitor (Sept. 18, 1996), aff'd, Lanza, 1997 WL 97836. Indeed, the Giardinas testified at pre-hearing depositions that they understood that they had a duty as union officers to ensure that Local 23 was free from the influence of organized crime.

However, the Giardinas now argue that prior to 1995, when LIUNA adopted its Ethical Practices Code ("EPC") and Ethics Disciplinary Procedure ("EDP") (collectively the "LIUNA Ethics Code"), LIUNA officers had no duty to act in the best interests of their membership by guarding against the presence of organized crime, citing a recent opinion of LIUNA Appellate Officer W. Neil Eggleston (the "Appellate Officer"), In re Coia, 99-004-IHO (August 6, 1999) ("Coia"), for that proposition.

However, while in Coia it was determined that it was appropriate for a particular union official to have relied upon an investigation conducted by a third party, nothing in the Coia decision can be taken to indicate that there was no duty to investigate corruption prior to the adoption of the LIUNA Ethics Code. The Appellate Officer's opinion, which the Giardinas mistakenly cite to support their position, only confirms the existence of a duty to combat corruption.

A union officer's fiduciary duty to investigate corruption and to implement remedial measures arises when that officer knows or should know about corruption within his or her union. See Coli, 803 F. Supp. at 752, 756 ("Once Coli knew, or had reason to know, of Talerico's incarceration, Coli had a fiduciary duty to inquire into the events and circumstances surrounding Talerico's incarceration."); Raimondi, 829 F. Supp. at 617-18 (holding that union officer's fiduciary duty was triggered by his learning of allegations regarding union official's ties to organized crime).

Here, the Giardinas' duty was triggered by their knowledge of their father's indictment and subsequent conviction, which revealed, among other things, his involvement with Gambino Family "boss" Paul Castellano in a labor payoff scheme.

After that conviction, the Giardinas became aware of a variety of events indicating that the Gambino influence at Local 23 did not end with Louis Giardina's imprisonment. For example, the appointment of Delmonico, who had never held office before, as Business Organizer of Local 23, and who was an associate of the Gambino Family, meant that the interests of the Gambino family would continue to be represented at Local 23.

Even if there was no reason to suspect Delmonico's connection to organized crime at the outset, in 1988 Delmonico began appointing relatives and associates of known organized crime figures to shop steward positions at Local 23. The Monitor held that these events, in addition to their father's racketeering conviction and the appointment of Delmonico as Local 23 Business Organizer, certainly triggered the Giardinas' duty to investigate the presence of organized crime at Local 23. In addition, numerous other red flags, including a 1993 newspaper article, investigative activities by the FBI, and the filing of the Civil RICO suit in 1994 that led to the Consent Decree, provided the Giardinas with overwhelming reason to make some sort of inquiry into the possibility that organized crime had infiltrated their union.

The Giardinas have never claimed that they undertook an investigation into organized crime influence at Local 23, but have instead argued that there was no need to conduct such an investigation in the first instance.

However, there is sufficient evidence to support the Monitor's conclusions that the Appellants had a legal duty to investigate, that they were aware of facts that gave rise to that duty, and that they failed to fulfill that duty. His conclusions were not arbitrary, capricious, or an abuse of discretion, and they are supported by sufficient evidence. For these reasons, the Monitor's Opinion is affirmed.
 
The Giardinas' Points Of Appeal Are Without Merit

The Giardinas have presented a fusillade of points on appeal, all of which are without merit.

The Giardinas have contended that the charges before the Monitor were barred by the doctrine of res judicata. In pressing this claim, they note that in July of 1995, Joseph Giardina was charged with, among other things, currying favor with organized crime and furthering the influence of La Cosa Nostra over the Local, and that the Monitor rejected that charge. Here however, a failure to investigate organized crime, not an active and intentional attempt to curry favor with organized crime, was charged. The doctrine of res judicata does not apply simply because two proceedings involve "the same parties, similar or overlapping facts, and similar legal issues." See Interoceanica Corp. v. Sound Pilots, Inc., 107 F.3d 86, 91 (2d Cir. 1997).

The Giardinas have also argued that they were denied due process of law because (1) the charges did not specify the constitutional provision violated in Charge Eight, and (2) the Investigations Officer asserted a "novel and misplaced" interpretation of the LIUNA Uniform Local Union Constitution in Charge Nine.

However, a review of both the charges and the constitutional provisions at issue does not reveal the defects asserted by Appellants. Indeed, the Giardinas testified that as union officers they had an obligation to act as fiduciaries in the best interests of the union and its members, and that this duty included protecting the union against organized crime.

The Giardinas have contended that the Monitor improperly applied the "just cause" standard applicable in this case by concluding that a preponderance of the evidence established that the Local 23 Constitution was violated, and that the Monitor improperly shifted the burden of proof, forcing the Giardinas to disprove the allegations rather than forcing the Investigations Officer to prove them. The record presented does not support such a contention. Moreover, the Giardinas admitted in sworn testimony that they had a duty to guard against corruption, and that they understood that they had such a duty, and it is undisputed that they did not undertake any investigation into the presence of organized crime within Local 23. Thus, there is no basis for the argument that the "just cause" standard was not applied.

The Giardinas claim that they were not afforded a full and fair hearing, and that they were denied due process, because they did not have the opportunity to examine several witnesses at the hearing allegedly vital to their defense. However, the Consent Decree does not empower either the Monitor or the Investigations Officer to compel the attendance of witnesses at such a hearing. The Investigations Officer notified these individuals that the Giardinas had requested their presence, but none chose to attend the hearing. Moreover, setting aside the fact that a number of the witnesses were requested less than one week prior to the hearing, the Monitor concluded that the testimony for which the witnesses would be offered was not relevant. Given the record before the court on appeal, this conclusion does not appear to be in error.

Finally, the Giardinas contend that the Investigations Officer has discriminated against them, and that there is no basis for his continued prosecution of claims against them in view of their retirement. Yet, it is the Giardinas that have prosecuted this appeal, and their retirement does not serve to erase the charge of breach of duty.

The Court has considered the Appellants' other claims on appeal, and determined them to be without merit.
 
Conclusion

The appeal of Joseph Giardina and Lawrence Giardina is therefore denied, and the Monitor's opinion is affirmed.

It is so ordered.