Laborers' International Union of North America v. Caruso , 197 F.3d 1195 ( 1999 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 99-1276
LABORERS’ INTERNATIONAL UNION OF NORTH AMERICA
and ROBERT BLOCH, in his official capacity as
Trustee of the Construction & General
Laborers’ District Council
of Chicago and Vicinity,
Plaintiffs-Appellees,
v.
BRUNO CARUSO, JOHN MATASSA, JR., LEO CARUSO,
and CONSTRUCTION & GENERAL LABORERS’ DISTRICT
COUNCIL OF CHICAGO AND VICINITY, an affiliated entity
of the Laborers’ International Union of North
America,
Defendants-Appellants.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 98 C 825--James B. Moran, Judge.
Argued October 27, 1999--Decided December 17, 1999
Before BAUER, COFFEY and EASTERBROOK, Circuit Judges.
COFFEY, Circuit Judge. Since 1994, when they
were the subject of a Department of Justice RICO
investigation, the Laborers’ International Union
of North America (LIUNA) has attempted to rid
itself of organized crime and stave off direct
government control. These efforts culminated in
LIUNA’s adoption of a reform program in 1995
designed to root out mafia influence and
corruption. In 1997, these reforms allowed LIUNA
to bring a trusteeship complaint against the
Chicago District Council (CDC) on charges of
organized crime corruption, financial wrongdoing,
and undemocratic procedures./1 As a result of
these charges, an Independent Hearing Officer
(IHO) concluded that a trusteeship was necessary
because of the overwhelming evidence that
organized crime had infiltrated the top ranks of
the existing CDC leadership and that the CDC had
been the continuous victim of undemocratic
process for more than 25 years. Consequently,
Robert Bloch was appointed as the CDC trustee
with full power to conduct all of the CDC’s
affairs.
Because the CDC refused to allow Bloch to
perform his duties without a federal court order,
LIUNA and Bloch filed this action in federal
court. The defendants-appellants (hereinafter
"CDC") filed counterclaims arguing that LIUNA’s
trusteeship action against CDC was really
"discipline" against them personally. On January
6, 1999, the trial judge entered summary judgment
in favor of LIUNA, stating that the IHO "has
heard and read a massive amount of evidence . .
. . Those rulings have evidentiary support. And
that is the end of it." We affirm.
I. BACKGROUND
In 1994, the Department of Justice announced
that it was preparing to file an action against
LIUNA under RICO with the intent of taking
control of LIUNA and ridding it of organized
crime. As part of LIUNA’s attempts to avoid
direct government control, the LIUNA General
Executive Board (GEB) amended the LIUNA
Constitution to add a new Ethics and Disciplinary
Procedure ("EDP") and an Ethical Practice Code
("EPC"). LIUNA hoped that it could persuade the
DOJ that it had the ability to expel organized
crime from its ranks without the need for direct
government control.
After LIUNA enacted the EDP and EPC, the DOJ
entered into an agreement providing for strict
government oversight of, and assistance to,
LIUNA’s internal reform process, but stopped
short of assuming direct responsibility or
control over LIUNA. Immediately after the
agreement with the DOJ, LIUNA officials and
LIUNA-affiliated entities from Chicago and
elsewhere tried to block the reforms and the
agreement with the DOJ through the filing of a
number of suits in federal court, all alleging
that the EDP, the EPC, and the agreement with the
DOJ, violated the federal labor statutes./2
After this court upheld the EDP, EPC, and
LIUNA’s agreement with the DOJ, see Serpico, 97
F.3d at 996-99, the GEB Attorney initiated
trusteeship proceedings against the CDC under the
EDP, the LIUNA Constitution, and Title III of the
Labor Management Reporting and Disclosure Act
(LMRDA). The trusteeship complaint alleged that
"for at least the past twenty-five years, the
leadership of the Chicago District Council has
had strong, discernible ties to the leadership of
organized crime in Chicago" and that a
trusteeship was necessary to remedy the problem.
On February 7, 1998, after 19 days of hearings
involving 45 witnesses and 200 exhibits, the IHO
determined that a trusteeship of the CDC was
necessary to expel the influence of organized
crime, restore democratic process and otherwise
carry out the legitimate business of the Union.
The CDC and its former officers sought to appeal
the IHO’s decision to the Union’s Appellate
Officer (AO), an attorney appointed under the EDP
to hear appeals of cases involving member
discipline. The AO issued two opinions in which
he ruled that the IHO’s opinion was not
appealable because it concerned a trusteeship
only and imposed no "discipline" on any of the
defendants within the meaning of the LMRDA.
Still, LIUNA and Bloch could not assume control
of the CDC because the Executive Board of the CDC
voted that it would not permit any trusteeship
and refused to allow Bloch access to the CDC
facilities. LIUNA and Bloch, therefore, filed
this action in federal court. On February 28,
1998, after an extensive hearing, the district
judge found the evidence against the CDC "earth
shattering" and entered a temporary restraining
order, barring the CDC and its former officers
from interfering with the trusteeship./3
LIUNA and Bloch filed for summary judgment, and
the CDC responded, claiming that: 1) there was an
improper relationship between the United States
and Arthur Coia, the GEB attorney, i.e., that the
United States government was exercising too much
influence over LIUNA decisions; 2) additional
discovery was necessary; 3) the trusteeship was
really a disciplinary action against Bruno Caruso
because he had run for the LIUNA presidency on a
platform which included ridding LIUNA of
government control; and 4) the allegations of
corruption were "stale" for the purposes of
establishing the need for a trusteeship. The
trial judge concluded that the IHO’s ruling had
evidentiary support and therefore granted the
plaintiffs’ motion for summary judgment. The CDC
appeals.
II. ISSUES
On appeal, the CDC contends that: 1) the IHO’s
"evident partiality" deprived the CDC of a fair
and impartial hearing; 2) LIUNA’s "patently
unreasonable" interpretation of its Constitution
and the EDP deprived the CDC of an intraunion
appeal; and 3) LIUNA’s "bad faith" and "unclean
hands" precluded summary judgment.
III. ANALYSIS
The first two issues the CDC raises on appeal,
that the IHO’s "evident partiality" deprived the
CDC of a fair and impartial hearing and that
LIUNA’s "patently unreasonable" interpretation of
its Constitution and the EDP deprived the CDC of
an intraunion appeal, were not raised in the
CDC’s response to the motion for summary
judgment. "We have long refused to consider
arguments that were not presented to the district
court in response to summary judgment motions."
Arendt v. Vetta Sports, Inc., 99 F.3d 231, 237
(7th Cir. 1996) (citing Cooper v. Lane, 969 F.2d
368, 371 (7th Cir. 1992); Resolution Trust Corp.
v. Juergens, 965 F.2d 149, 153 (7th Cir. 1992);
and Manor Healthcare Corp. v. Guzzo, 894 F.2d
919, 922 (7th Cir. 1990)). Accordingly, the CDC
has waived any argument concerning the IHO’s
partiality and LIUNA’s interpretation of its
constitution or EDP.
Although the CDC has preserved its arguments
concerning LIUNA’s "bad faith" and "unclean
hands," they are meritless. In Serpico, 97 F.3d
at 999, this court upheld LIUNA’s agreement with
the government stating that "we, too, think that
reasonable and honest interpreters could have
concluded that the steps the Board took were
necessary to avoid a RICO complaint, which given
the dire consequences of a receivership could
have been deemed an emergency." The CDC’s
attempts to characterize its new challenges to
the EDP as challenges to how the EDP is
implemented do not alter the fact that the EDP
was appropriately enacted and we are not aware of
any compelling reason that warrants concluding
that LIUNA’s efforts to establish a trusteeship
over the CDC was in bad faith.
The decision of the district court is
AFFIRMED.
/1 The CDC is a subordinate body of LIUNA, located
in Chicago, which functions as the central
representative body for 21 affiliated local
unions comprised of approximately 19,000 LIUNA
members.
/2 See Serpico v. Laborers’ Int’l Union N. Am., 97
F.3d 995 (7th Cir. 1996), for a more detailed
account of the initial challenge to the EDP and
EPC.
/3 On March 3, 1998, after another hearing, the
judge ruled that the terms of the temporary
restraining order should continue as a
preliminary injunction.