NY Fed. Judge Allows Racketeering Case to Go Forward

A company that claimed that a union tried to use fraud and extortion to force it out of business was allowed to pursue its racketeering claim against the union.  Although the company stated only four acts related to the claim, they were all related to the alleged scheme and, because they threatened to continue, satisfied the continuity requirement.


Andrea Doreen Ltd. sued Building Material Local Union 282 and the trustees of its pension funds for violations of the Racketeer Influenced & Corrupt Organizations (RICO) Act.  Doreen alleged that, in retaliation for its refusal to make unlawful payments to the trust funds, the union and the trustees conspired to put it out of business by slowing down work at its site by:  forcing slowdowns at Doreen’s work site by using physical threats and a pit bull to intimidate workers; Inflating the number of hours union drivers claimed by requiring its drivers to sign in multiple times for the same shift; and requiring union employees to make phony entries in the shop steward report.


U.S. Dist. Judge William G. Young concluded that these acts involved the threat of force and were related to the alleged goal of the scheme: to cause Doreen to lose profits and to create fraudulent records.  The court rejected the union’s argument that Doreen’s predicate acts lacked continuity.  Although the acts lasted only seven months before the government entered into a consent decree with the union and appointed a corruption officer to investigate corruption in the union, the scheme did not have an inherent endpoint.  The mere fact that the government investigated and removed the primary people responsible for the behavior giving rise to the predicate acts did not, as a matter of law, mean that the scheme did not threaten to continue into the future, the court said.  [Andrea Doreen Ltd., et al. v. Building Material Local  Union  282, et al., No. Civ.A. 98-4838-WGY (E.D.N.Y. 01/27/04)]