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granting motion to dismiss because statements made at union rallies were protected by the First Amendment and could not be used as a basis for imposing liability on defendants
Summary of this case from EAGLES NEST RANCH ACAD. v. BLOOM TP. BOARD OF TRUSTOpinion
Case No. C-1-00-374
March 30, 2002
ORDER GRANTING MOTIONS TO DISMISS
This matter comes before the Court on Defendant United Steelworkers of America, Local 169's Motion to Dismiss Second Amended Complaint (doc. #28) and the Motion of Defendants United Steel Workers of America, AFL-CIO, American Federation of Labor-Congress of Industrial Organizations, George F. Becker, Leo W. Gerard and Richard L. Trumka to Dismiss All Claims Against Them in the Second Amended Complaint (doc. #32). For the reasons set forth below, the Court GRANTS both motions (docs. #28, 32) and DISMISSES the Second Amended Complaint (doc. #25).
I. FACTUAL BACKGROUND
A. The Parties
Plaintiff AK Steel owns and operates a steel mill in Mansfield, Ohio (the "Mansfield Plant"). Defendants American Federation of Labor-Congress of Industrial Organizations ("AFL-CIO"), United Steel Workers of America ("USWA"), and Local 169, United Steel Workers of America ("Local 169") (collectively, the "union Defendants") are labor unions. Local 169, as a local affiliate of the USWA, represents workers at the Mansfield Plant. Defendant George F. Becker is President of the USWA and sits on the AFL-CIO Executive Council. Defendant Leo W. Gerard is Secretary-Treasurer of the USWA. Defendant Richard L. Trumka is Secretary-Treasurer of the AFL-CIO.
B. The Chronology
This lawsuit arises from a labor dispute that began between Defendants and Armco, Inc. ("Armco"), the company that owned and operated the Mansfield Plant until its merger with AK Steel in late September, 1999. Armco entered into a collective bargaining agreement with the USWA, effective September 1, 1993 (the "Agreement"), governing employment at the Mansfield Plant. The Agreement was scheduled to expire on August 31, 1999. Before that date, Armco, the USWA, and Local 169 negotiated with the goal of entering into a successor collective bargaining agreement. Those negotiations were unsuccessful, and the Agreement expired on August 31, 1999. Soon after, Armco declared a lockout and continued steel production with temporary replacement workers. This move by Armco, made in response to alleged threats and disruptions by the USWA and Local 169 prior to September 1, led to the labor unrest that forms the basis of this suit.
In addition to the hundreds of illegal acts that Plaintiff alleges occurred between September 1, 1999 and August 31, 2000, described below, Plaintiff describes in detail three protests against AK Steel organized by the union Defendants. On September 10, 1999, the USWA and Local 169 held a protest across the street from the Mansfield Plant. Several hundred people attended the protest, became unruly, and threw rocks and other objects at Armco's buildings, vehicles, and employees, as well as vehicles carrying replacement workers. Fourteen people were injured in the fracas.
On November 20, 1999, the USWA, Local 169, and representatives of the AFL-CIO and other unions rallied against AK Steel, which had since taken over the Mansfield Plant. At the rally, representatives from numerous AFL-CIO affiliates donated money to Local 169. Speakers at the rally, including representatives of the AFL-CIO and USWA, derided AK Steel and its replacement workers, calling them "black booted goons," "scabs," "corporate greedy pigs," and "low life scum." (Doc. #25 ¶¶ 26, 27, 29.) They also exhorted the workers to find a way to frighten the replacement workers and disrupt AK Steel's hiring of replacement workers. One speaker stated that "AK Steel is history!" (Id. ¶ 29.) Multiple speakers favorably used other labor actions, in which the USWA, Defendants Becker and Trumka, and the AFL-CIO were allegedly involved in illegal acts against employers, as positive examples to motivate the crowd. The rally concluded with a march through downtown Mansfield, during which union members chanted anti-AK Steel and anti-replacement worker slogans and made obscene gestures.
On March 25, 2000, the USWA, Local 169, and representatives of a number of unions, including the AFL-CIO, held another rally. Representatives of unions affiliated with the AFL-CIO gave money at the rally to support Local 169. Representatives of the AFL-CIO spoke of solidarity between the USWA and other unions, and speakers reiterated the success of other labor actions around the country. The District Director of the USWA declared the action against AK Steel to be a "fight" and promised AK Steel that "we are going to be here one day longer than you." (Id. ¶ 39.) Defendant Becker repeatedly derided AK Steel, as well as corporate employers everywhere, declaring that AK Steel is "an evil empire." (Id. ¶ 42.) He also said, "Violence, I don't view that as property [damage]. . . . You have more right and more claim on that facility than the management that's running it into the ground." (Id.) Defendant Trumka told the crowd, "[W]e have to make sure that no employer gets off on the cheap; that we make it very, very, very expensive for every one of them." (Id. ¶ 41.) Following the rally, the crowd marched past a hotel they believed provided housing to AK Steel replacement workers, promising "no peace" and declaring a "war" between AK Steel and Local 169.
As of the filing of this lawsuit, the labor dispute between the parties was ongoing.
C. The AK Steel Allegations
AK Steel's allegations of specific illegal acts committed by Defendants during the labor dispute at the Mansfield Plant span more than eighty-five pages and consist of over two hundred paragraphs and subparagraphs. Plaintiff divides these allegations into two groups: "Predicate Acts of Arson" and "Predicate Acts of Extortion." (Doc. #25 ¶¶ 146, 147.) Plaintiffs allege twelve "Predicate Acts of Arson" in which "the USWA, Local 169 and/or their co-conspirators or individuals acting in furtherance of a conspiracy in violation of RICO between the Defendants" planted explosives or attempted to cause explosions at the Mansfield plant or on property owned by AK Steel employees or their relatives. (Id. ¶¶ 146a-1.)
AK Steel's allegations of "Predicate Acts of Extortion" are far more voluminous and include at least 259 different acts. Plaintiff alleges that "the USWA, Local 169 and/or their co-conspirators or individuals acting in furtherance of a conspiracy in violation of RICO between the Defendants," among other things, threatened replacement workers, spread nails on roadways, blockaded entrances to the Mansfield Plant, threw rocks and other objects at the plant and replacement workers, and vandalized property. (Id. ¶¶ 147a-jy.) According to the Second Amended Complaint, each of "[t]hese acts were intended to extort valuable things or benefits from AK Steel, and to intimidate and coerce its employees, individuals doing business with AK Steel, and other employers who might attempt to use replacement workers in the future." (Id.) Plaintiff also includes the statements made at the November, 1999 and March, 2000 rallies as extortionate predicate acts. Plaintiff asserts that through these acts Defendants sought to extort five "things of value" from AK Steel: AK Steel's ability to use its property and continue operations; AK Steel's use of replacement workers; a labor contract on terms more favorable than those obtainable through lawful negotiation and protest; reinstatement of union workers; and the complete destruction of AK Steel. (Id. ¶ 149.)
Out of the 259 paragraphs in this section, only twenty-nine of them provide any more than the boilerplate allegations of who may have perpetrated the acts. (Doc. #25 ¶¶ 147a, e, f, g, o, ab, ac, ao, ar, ba, bb, bc, be, bi, cc, ce, dv, fd, ff, gc, gd, ge, gj, hh, hj, hr, hz, ip, jc.)
While Plaintiff characterizes Defendants' alleged demands as "things of value," the majority of them-AK Steel's capacity to continue operations, its use of replacement workers, and the complete destruction of AK Steel-cannot be said to be "valuable things" under Ohio extortion law, as they have no discernable monetary value to Defendants or, especially in the case of the complete destruction of AK Steel, to anyone else. See State v. Stone, No. 90-CA-23, 1992 56778, at *6 (Ohio Ct.App. Mar. 26, 1992) ("the [Ohio Revised Code Section] 2905.11 extortion statute phrase "valuable thing or valuable benefit" must be interpreted to include only things or benefits that have a monetary value").
D. The Pattern Allegations
Plaintiff alleges more than 200 incidents during twenty-six labor actions since 1979 that involved local affiliates of USWA other than Local 169. Plaintiff asserts that these incidents were "engineered, designed, carried out, supported, ratified, condoned, and knowingly tolerated by the USWA, certain of its locals, and the AFL-CIO." (Doc. #25 ¶ 48.) Similarly, each union Defendant "and its members or agents, directed, participated in, committed, aided and abetted, facilitated, promoted, funded, ratified, conspired to commit, and knowingly tolerated the predicate acts committed against AK Steel." (Id. ¶¶ 153-155.) All three individual Defendants also "directed, aided and abetted, facilitated, promoted, funded, condoned, ratified, and knowingly tolerated many of the predicate acts and conspired to commit all of the predicate acts." (Id. ¶ 156.) Furthermore, Defendants have allegedly ratified the acts by failing to investigate or discipline union members who committed an unlawful act, funding the acts, and by supporting them in public statements.
Plaintiff also alleges with respect to each labor action that "[t]he unlawful activity [was] engineered, designed, directed, carried out, supported, ratified, condoned, and knowingly tolerated by the USWA and the AFL-CIO, or individuals acting in furtherance of a conspiracy in violation of RICO between the USWA." (See, e.g., doc #25 ¶ 50.)
Plaintiff alleges that a broad spectrum of unlawful activity occurred during these labor actions, including arson, attempted murder, murder, and extortion. According to the Second Amended Complaint, these acts were committed by "the USWA and/or its co-conspirators or individuals acting in furtherance of a conspiracy in violation of RICO between the USWA, certain of its locals, and/or the AFL-CIO." (See, e.g., id. ¶ 84a.) Plaintiff alleges that each "Predicate Act of Extortion" "was intended to extort valuable things or benefits from [the employer], and to intimidate and coerce its employees, individuals doing business with [the employer], and other employers who might attempt to use replacement workers in the future." (See, e.g., id. ¶ 75a.)
Out of the more than 200 specific act allegations, only twenty-two of them allege facts that identify the specific perpetrator of the act in any way. (Doc. #25 ¶¶ 57s, 61b, 68b, 68f, 68g, 91e, 102b, 106b, 110b, 118a, 118b, 131b, 136a, 137a, 144a, I, n, r, bg, cm, ct, dn.)
AK Steel also includes allegations implicating the Travel Act, 18 U.S.C. § 1952. Plaintiff alleges that all Defendants have "purposefully and deliberately used interstate travel and commerce or facilities of interstate travel and commerce to commit violence or facilitate and promote unlawful activity, including many of the previously alleged acts of arson and extortion." (Id. ¶ 150a-f.) Likewise, Defendants have "used interstate commerce[,] including mass-produced magazine articles, newspaper articles, advertisements, press releases, fliers, and other communication devices[,] to incite, facilitate, and promote violent, unlawful acts." (Id.) Agents of the union Defendants and the individual Defendants have also "used cellular phones, phones, the mails, facsimiles, and other mechanisms of interstate travel to facilitate or promote the commission of violent, unlawful acts." (Id.) Plaintiffs further allege that all Defendants have personally or through their agents engaged in interstate travel in order to facilitate, promote, or commit the alleged unlawful acts.
E. The Counts
Plaintiff asserts two causes of action under the Racketeer Influenced and Corrupt Organizations (RICO) chapter of the Organized Crime Control Act of 1970. The first alleges a violation of 18 U.S.C. § 1962(c); the other alleges a conspiracy to violate subsection (c) in violation of 18 U.S.C. § 1962(d). (Doc. #25.)
II. ANALYSIS
According to 18 U.S.C. § 1962(c):
It shall be unlawful for any person through a pattern of racketeering activity or through collection of an unlawful debt to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce.
From this section, the Sixth Circuit has distilled four elements that a plaintiff must allege: 1) a pattern of racketeering activity; 2) that an "enterprise" existed; 3) a nexus between the "pattern of racketeering activity" and the enterprise; and 4) that an injury to business or property occurred as a result of the pattern of racketeering activity. VanDenBroeck v. Commonpoint Mortgage Co., 210 F.3d 696, 699 (6th Cir. 2000). In addition, a defendant must have not only participated in the alleged scheme, it must have also participated in the operation or management of the enterprise itself. Id. (citing Reves v. Ernst Young, 507 U.S. 170, 183 (1993)). Plaintiff's Second Amended Complaint, despite its bloated length, nevertheless fails to satisfy even the first element and therefore fails to state a claim upon which relief can be granted.
Plaintiff's insistence that pleading all the elements of its RICO claims is merely a suggestion rather than a requirement (see, e.g., doc. #33, at 4 ("To allege a violation of 18 U.S.C. § 1962(c), the Complaint may allege [the various elements of such a claim].") (emphasis added)), offends even the "spirit of the liberal rules of pleading" that Plaintiff repeatedly invokes in its defense.
According to 18 U.S.C. § 1961(5), "'pattern of racketeering activity' requires at least two acts of racketeering activity, one of which occurred after the effective date of this chapter and the last of which occurred within ten years (excluding any period of imprisonment) after the commission of a prior act of racketeering activity." Racketeering activity, as defined under the statute, includes murder, attempted murder, arson, extortion, and violations of the Travel Act, 18 U.S.C. § 1952. 18 U.S.C. § 1961(1). While the Supreme Court has found that satisfying section 1961(5) is a necessary, though not sufficient, requirement to show a "pattern of racketeering activity," see H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 237 (1989), at the bare minimum AK Steel must sufficiently allege two predicate offenses.
In fact, Plaintiff has alleged more than 500 different incidents that it characterizes as "predicate acts." However, all of the "predicate act" allegations, with the exception of those involving the specific statements made at the November, 1999 and March, 2000 rallies, merely echo conclusory boilerplate language in an attempt to satisfy the elements of the various predicate offenses. Such conclusory language, however, does not state a claim under Rule 12(b)(6).
Relying on the requirement of Federal Rule of Civil Procedure 8(a) that the complaint contain a "short, plain statement . . . showing that the pleader is entitled to relief," Plaintiff argues that its boilerplate allegations are sufficient to state a claim under Rule 12(b)(6). For instance, Plaintiff asserts that the boilerplate broadly identifying the alleged perpetrators of each offense contains "factual allegations, which must be assumed to be true and construed in the light most favorable to the Complaint." (Doc. #33 at 6 n. 4.) Likewise, Plaintiff argues that it alleges extortionate intent by stating that such intent existed. AK Steel asserts that these allegations satisfy the purpose of Rule 8(a) of putting Defendants on notice of the claims against them, see Rose v. Bartle, 871 F.2d 331, 355 (3d Cir. 1989), and therefore defeat a Rule 12(b)(6) motion. Plaintiff, however, misunderstands and misapplies the standard of review on Rule 12(b)(6) motions.
The irony of labeling Plaintiff's 225-page Second Amended Complaint a "short, plain statement" is not lost on the Court.
Federal Rule of Civil Procedure 12(b)(6) authorizes dismissal of a complaint for "failure to state a claim upon which relief can be granted." In assessing the sufficiency of a complaint, courts must follow "the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). This rule accords with the purpose of Rule 12(b)(6), which the Sixth Circuit has explained "is to allow a defendant to test whether, as a matter of law, the plaintiff is entitled to legal relief even if everything alleged in the complaint is true." Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir. 1993). Therefore, "[o]n a Fed.R.Civ.P. 12(b)(6) motion, all of the allegations contained in the plaintiff's complaint are accepted as true, and the complaint is construed liberally in favor of the party opposing the motion." Miller v. Currie, 50 F.3d 373, 377 (6th Cir. 1995). At the same time, however, the Court "need not accept as true legal conclusions or unwarranted factual inferences." Gregory v. Shelby County, 220 F.3d 433, 446 (6th Cir. 2000). "[A] complaint must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory." Scheid, 859 F.2d at 436.
Plaintiff correctly asserts that RICO claims are not subject to a heightened pleading standard. See, e.g., Rose v. Bartle, 871 F.2d 331, 355-56 (3d Cir. 1989) (the 12(b)(6) standard of review "does not distinguish between RICO and non-RICO claims").
Plaintiff's allegations, despite AK Steel's insistence that they are factual, are merely conclusory. Of the more than 500 allegations of "predicate acts," all but fifty-one identify the alleged perpetrators with boilerplate language asserting that the perpetrators could be anyone ranging from the individual Defendants themselves to unidentified co-conspirators in a RICO enterprise. Likewise, every extortion allegation concludes with the boilerplate allegation, "These acts were intended to extort valuable things or benefits from [the employer], and to intimidate and coerce its employees, individuals doing business with [the employer], and other employers who might attempt to use replacement workers in the future." Not a single one of the more than 500 asserted predicate offenses is alleged without the use of boilerplate language relating to a key element of the offense.
These allegations are nothing more than unacceptable sweeping legal conclusions cast in the form of factual allegations. See Wright Miller, Federal Practice Procedure § 1357 at 315-18 (2d ed. 1990) (courts "also have said that they do not accept 'legal conclusions,' 'unsupported conclusions,' 'unwarranted inferences,' 'unwarranted deductions,' 'footless conclusions of law,' or 'sweeping legal conclusions cast in the form of factual allegations'") (footnotes omitted). AK Steel alleges no facts from which one could infer the conclusions that the Second Amended Complaint baldly asserts: that Defendants were responsible for the predicate offenses and that they acted with the requisite intent. Rather, AK Steel relies on vast quantities of conclusory, legalistic language to conceal the absence of well-pleaded factual allegations. Not only are Plaintiff's allegations conclusory, they also do not provide Defendants adequate notice of the claims against them. Instead, they simply inform Defendants that they are to be held responsible for the acts of unknown persons, with whom they might have a relationship of unknown dimensions, and who acted with uncertain intent. Consequently, Plaintiff's allegations of murder, attempted murder, arson, and extortion, though plentiful, do not sufficiently allege predicate offenses to withstand Defendant's Rule 12(b)(6) motion.
A line of cases in the Sixth Circuit has observed that "when a complaint omits facts that, if they existed, would clearly dominate the case, it seems fair to assume that those facts do not exist." Scheid, 859 F.2d at 437 (citation omitted); see also McMichael v. Henderson, No. 99-4262, 2000 WL 1140755, at **1 (6th Cir. Aug. 8, 2000). This observation seems particularly relevant here, where Plaintiff has filed a complaint that is more than two hundred pages long and has asserted in its papers that if it were to present all of the evidence it has gathered to this point, "the Complaint would be thousands of pages long . . . and have countless hours of video and other supporting evidence attached." (Doc. #33 at 4 n. 2.) It speaks volumes that even with this evidence at its disposal, Plaintiff still did not sufficiently allege who committed the predicate acts or how those acts were in fact done with extortionate intent.
In fact, were AK Steel's pleadings allowed to withstand a motion to dismiss, nothing would prevent Plaintiff from filing a similar lawsuit against anyone at all, as long as the complaint included similar conclusory statements echoing the specific language of the applicable statute.
Plaintiff also argues that it alleged violations of the Travel Act. These allegations fail for two reasons. First, the Travel Act forbids interstate travel or commerce for the purpose of committing violence or facilitating or promoting unlawful activity. 18 U.S.C. § 1952. As the Court finds lacking Plaintiff's allegations of the requisite violent or unlawful activity, its Travel Act allegations also fail to state a claim. Second, Plaintiff's Travel Act allegations are conclusory and merely echo the language of the statute. (Doc. #25 ¶ 150.) The supporting "factual" allegations are similarly generic. For instance, Plaintiff asserts that each Defendant "has used cellular phones, phones, the mails, facsimiles, and other mechanisms of interstate travel . . . to facilitate and promote the commission of violent, unlawful acts." (Id.) Plaintiff alleges that each union Defendant "has transported individuals or facilitated the transportation of individuals across state lines for the purpose of having these individuals commit unlawful acts or fund unlawful acts." (Id.) Plaintiff, however, never alleges specific facts from which one could draw these legal conclusions. As such, the Travel Act violations are not sufficiently alleged as predicate offenses.
For instance, Plaintiff alleges that "Defendants have purposefully and deliberately used interstate travel and commerce or facilities of interstate travel and commerce to commit violence or facilitate and promote unlawful activity." (Doc. #25 ¶ 150.) The statute states that "[w]hoever travels in interstate or foreign commerce or uses the mail or any facility in interstate or foreign commerce, with intent to- . . . (2) commit any crime of violence to further an unlawful activity; or (3) otherwise promote . . . or facilitate the promotion . . . of any unlawful activity" violates the Travel Act. 18 U.S.C. § 1952(a).
Finally, the statements made at the November and March rallies, though factual allegations to be taken as true for purposes of a motion to dismiss, may not be used by Plaintiff to impose liability upon Defendants, because the First Amendment protects such speech. An individual may be liable for statements made during a public address only where the speech authorizes, directs, or ratifies specific tortious acts or is likely to incite lawless action. NAACP v. Claiborne, 458 U.S. 886, 927 (1982). The alleged statements, however, do neither. The statements at the rallies were inflammatory, of course. Speakers called for union members to fight AK Steel "tooth and nail," to "kick a scab in the ass today," and to "interview" replacement workers before they were interviewed by AK Steel. Defendant Trumka told AK Steel that it would not "get a second of peace" as long as the lockout continued, and Defendant Becker told the crowd that property damage is not violence.
Plaintiff argues that the First Amendment is inapplicable because there is no "state action" in this case. (Doc. #33 at 25.) However, to the extent that "state action" is necessary to invoke First Amendment protection here, the application to a court in a civil action between private parties for relief that would restrict speech constitutes sufficient government action to invoke the protections of the First Amendment. See NAACP v. Claiborne, 458 U.S. 886, 916 n. 51 (1982).
Nonetheless, such language does not direct or ratify any specific tortious acts. Nor does Plaintiff allege that any unlawful acts were committed in close enough temporal proximity to the inflammatory speeches for the acts to have been incited by Defendants' words. Instead, Plaintiff states that each rally was followed by a peaceful, if angry, march. Consequently, the First Amendment protects Defendants' speech, and that speech may not be used to impose RICO liability on Defendants.
Plaintiff therefore fails to allege a necessary element of its RICO claim-namely, that Defendants committed two predicate offenses. Consequently, Plaintiff's claim under 18 U.S.C. § 1962(c) is DISMISSED.
B. Violation of 18 U.S.C. § 1962(d)
A conspiracy claim under 18 U.S.C. § 1962(d) cannot survive a motion to dismiss if the pleadings do not also state a substantive RICO claim for which relief may be granted. See Craigshead v. E.F. Hutton Co., 899 F.2d 485, 295 (6th Cir. 1989) ("Plaintiffs' conspiracy claim cannot stand in light of the dismissal of their other RICO counts."); Efron v. Embassy Suites, Inc., 223 F.3d 12, 21 (1st Cir. 2000); Howard v. America Online Inc., 208 F.3d 741, 751 (9th Cir. 2000). Because Plaintiff's substantive RICO claim is dismissed, the Court DISMISSES Plaintiff's RICO conspiracy claim.
Plaintiff's argument that the Supreme Court held to the contrary in Beck v. Prupis, 529 U.S. 494 (2000), is simply incorrect. The Supreme Court explicitly did not resolve the question of whether a plaintiff alleging a RICO conspiracy must also allege an actionable substantive RICO violation. Beck, 529 U.S. at 506 n. 10.
III. CONCLUSION
The Court acknowledges that many of the acts detailed in the Second Amended Complaint, if truthfully alleged, have caused both physical and emotional injury to numerous individuals and economic harm to various corporations. Nevertheless, Plaintiff's allegations, though large in number and broad in scope, are unsupported by specific, factual allegations. They therefore do not entitle Plaintiff to resort to federal RICO laws for redress. Consequently, Defendants' motions to dismiss are both GRANTED. (Docs. # 28, 32.)
IT IS SO ORDERED