Scivally v. Graney, 21 F.3d 420, 1st Cir. (1994)

21 F.
3d 420
RICO Bus.Disp.Guide 8539
NOTICE: First Circuit Local Rule 36.2(b)6 states unpublished

opinions may be cited only in related cases.
Charla SCIVALLY, Plaintiff, Appellant,
v.
William R. GRANEY, ET AL., Defendants, Appellee.
No. 93-2075
United States Court of Appeals, First Circuit

April 15, 1994
Appeal from the United States District Court for the District of
Massachusetts [Hon. Rya W. Zobel, U.S. District Judge ]
Charla Scivally on brief pro se.
Diane M. Kottmyer, Scott C. Moriearty, Deborah Kravitz and Bingham,
Dana & Gould on brief for appellee.
D.Mass.
AFFIRMED.
Before Breyer, Chief Judge, Cyr and Stahl, Circuit Judges.
Per Curiam.
Appellant, Charla Scivally, appeals the 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. Sec. 1964(c), and
the grant of summary judgment to Graney and Tognarelli on appellant's claim
seeking relief for alleged violations Sec. 101(a)(2) of Title I of the LaborManagement Reporting and Disclosure Act [LMRDA] (codified at 29 U.S.C.
Sec. 411(a)(2)). We affirm.
* 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. Sec.
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 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. Sec. 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. Sec. 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. Sec. 186(a). She
alleges that Graney and Tognarelli illegally accepted the bribes, in violation of
29 U.S.C. Sec. 186(b).1 Since the payments 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
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. Sec. 1964(c), and that the injury was proximately caused by the
illegal activity, Holmes v. Securities Investor Protection Corp., 112 S.Ct. 1311,
1316-22 (1992). To establish the 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 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. California State
Council of Carpenters, 459 U.S. 519, 542 (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 require showing of proximate cause in
Associated General Contractors "applies just as readily to Sec. 1964(c)").
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 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 Corp., 559 A.2d 257
(Del. Ch. 1989). Scivally contends that 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
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. 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
Associated General Contractors, 459 U.S. at 542 (since alleged injuries may
have been produced by independent factors, plaintiff has not shown they were
proximately caused by defendant's acts).
9
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.
10
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. Sec. 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 requisite
to confer RICO standing] exists."2 Heinold v. Perlstein, 651 F. Supp. 1410,
1412 (E.D. Pa. 1987) (plaintiff 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
11
Scivally alleges that appellees Graney and Tognarelli violated her right to free
speech and assembly, pursuant to 29 U.S.C. Sec. 411(a)(2),3 when they
dissolved the committee without consulting its membership. The district court
granted summary judgment to defendants.
12
Scivally cannot prevail on her Sec. 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 employer dominated. Employer

domination of a labor organization is an unfair labor practice in violation of 29
U.S.C. Sec. 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 Steel Co., 21 LLRM 1232, 1234 (1948) ("Where
we find that an 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. v. Northeastern Univ., 601 F.2d 1208, 1215
n. 7 (1st Cir. 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), and almost certainly
would have prevented the committee from ever being certified by the NLRB,
see N.L.R.B. v. United Mine Workers, 355 U.S. 453, 458 (1958) (upon finding
domination "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 longer have been a "labor
organization" within the meaning of 29 U.S.C. Sec. 402(i) & (j).5 However, the
rights protected by Sec. 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 Sec. 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 committee, it was
appropriate to grant them summary judgment.
13
Affirmed.
Section 186(a) provides, inter alia, that "it shall be 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 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)
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
According to 29 U.S.C. Sec. 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 ...
Scivally concedes that, if a complaint of employer domination had been

brought before the NLRB, the NLRB would have ordered the committee
disestablished
According to 29 U.S.C. Sec. 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 Sec. 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....

Scivally v. Graney, 21 F.3d 420, 1st Cir. (1994)

Uploaded by

Copyright:

Available Formats

Scivally v. Graney, 21 F.3d 420, 1st Cir. (1994)

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Scivally v. Graney, 21 F.3d 420, 1st Cir. (1994)

Uploaded by

Copyright:

Available Formats

21 F.

NOTICE: First Circuit Local Rule 36.2(b)6 states unpublished

United States Court of Appeals, First Circuit

Appellant, Charla Scivally, appeals the dismissal of her amended complaint

* In 1946, Polaroid established the Polaroid Employees' Committee [the

Scivally's complaint fails to allege sufficient facts to establish that appellees'

exhibits and extensive excerpts from the depositions of 34 witnesses").

alleges that the committee as it existed was employer dominated. Employer

Similarly, appellant suffered no cognizable injury in being deprived of her

Scivally concedes that, if a complaint of employer domination had been

You might also like