Ubc v. Bctd, Afl-Cio ( 2014 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED BROTHERHOOD OF No. 12-36049
CARPENTERS AND JOINERS OF
AMERICA; SOUTHWEST REGIONAL D.C. No.
COUNCIL OF CARPENTERS; 2:12-cv-00109-
SOUTHWEST CARPENTERS JATC; TOR
PACIFIC NORTHWEST REGIONAL
COUNCIL OF CARPENTERS;
WASHINGTON STATE UBC JATC; OPINION
NORTHEAST CARPENTERS REGIONAL
COUNCIL OF CARPENTERS;
CARPENTERS AND CARPENTERS
DISTRICT COUNCIL OF GREATER ST.
LOUIS AND VICINITY; LARRY
GOULD; WILLIAM CLAYTON;
JORDAN TRUMAN; BUTCH PARKER;
SCOTT FLANNERY; RICHARD
BURWELL; EMANUEL LEE; PAUL
LEDYARD; JOSEPH EDNEY; WILLIE
MARSHALL; JOHN LAKE; ROGER
JOHNSON; BRIAN THOMPSON;
CHARLES MCWILLIAMS; BILLY
COOLEY; SHERYL HOLLIS; BOOKER
STANDERFER; BOB SCOTT; JOE
BACA,
Plaintiffs-Appellants,
v.
2 CARPENTERS V. BUILDING TRADES
BUILDING AND CONSTRUCTION
TRADES DEP’T, AFL-CIO; JAMES
WILLIAMS; RON AULT; DAVID
MOLNAA,
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of Washington
Thomas O. Rice, District Judge, Presiding
Argued and Submitted
May 12, 2014—Seattle, Washington
Filed October 28, 2014
Before: Diarmuid F. O’Scannlain, Andrew J. Kleinfeld,
and Marsha S. Berzon, Circuit Judges.
Opinion by Judge O’Scannlain
CARPENTERS V. BUILDING TRADES 3
SUMMARY*
RICO / Labor Law
The panel affirmed the dismissal of an action brought
under RICO and the Labor Management Reporting and
Disclosure Act by the United Brotherhood of Carpenters and
Joiners of America, a labor union, against the Building and
Construction Trades Department, AFL-CIO, an umbrella
labor organization representing unions and individuals in the
construction industry.
The Carpenters, together with subordinate labor
organizations and individual members, alleged that the
Building Trades conducted a campaign of intense economic
pressure, as well as acts of vandalism and threats of force, to
persuade the Carpenters to reaffiliate with the Building
Trades and pay dues to it.
The panel held that the Carpenters failed to state a civil
RICO claim because it did not plausibly allege any predicate
acts, or racketeering activity, under either the Hobbs Act or
state extortion law. The panel held that the Hobbs Act is not
violated, and a “claim of right” defense is not defeated, based
on unwanted or subjectively valueless services in the context
of an economic pressure campaign. The panel also held that
the Carpenters did not adequately allege that the Building
Trades, its agents, or its coconspirators used violence or force
against the union or its members.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
4 CARPENTERS V. BUILDING TRADES
The panel held that the Carpenters failed to state a claim
that officers of the Building Trades violated the LMRDA by
orchestrating the termination of an affiliation agreement
between the Carpenters and the Metal Trades Department,
AFL-CIO, another labor organization, because Carpenters
members were not expelled from the Metal Trades as a
disciplinary action.
The panel held that the district court did not abuse its
discretion by denying leave to amend the complaint.
COUNSEL
Craig D. Singer, Williams & Connolly LLP, Washington,
DC, argued the cause and filed the briefs for the plaintiffs-
appellants. With him on the briefs were Charles Davant IV,
Williams & Connolly LLP, Washington, DC, Daniel M.
Shanley, DeCarlo & Shanley, Los Angeles, CA, and G.
Robert Blakey (Of Counsel), William J. and K. O’Neill
Professor of Law, Notre Dame Law School, Notre Dame, IN.
Leon Dayan, Bredhoff & Kaiser, PLLC, Washington, DC,
argued the cause and filed the brief for the defendants-
appellees. With him on the brief were Abigail V. Carter,
Joshua B. Shiffrin, Matthew Stark Rubin, and Laurence Gold,
Bredhoff & Kaiser, PLLC, Washington, DC.
CARPENTERS V. BUILDING TRADES 5
OPINION
O’SCANNLAIN, Circuit Judge:
We must decide whether a labor union’s use of economic
pressure is extortion under the Racketeer Influenced and
Corrupt Organizations Act.
I
The Building and Construction Trades Department, AFL-
CIO, (“Building Trades”) is an umbrella labor organization
representing unions and individuals in the construction
industry. Subordinate labor unions pay the Building Trades
per capita monthly fees and must comply with the Building
Trades’ rules. The United Brotherhood of Carpenters and
Joiners of America (“Carpenters”) is no longer affiliated with
the Building Trades because it believes that the Building
Trades’ services are “unrequested, unwanted and
unnecessary” and that its rules are “stale, outdated and
anticompetitive.”1
This case concerns the “Push-Back-Carpenters
Campaign,” a campaign of (at least) intense economic
pressure orchestrated by the Building Trades to force the
Carpenters into paying what it calls “monthly bloated per
capita payments in perpetuity,” that is, into reaffiliating with
the Building Trades and paying dues. Allegations of
“economic pressure” include: promoting a 2008 AFL-CIO
1
As we are reviewing a dismissal under Federal Rule of Civil Procedure
12(b)(6), we accept as true the complaint’s well-pleaded factual
allegations. E.g., OSU Student Alliance v. Ray, 699 F.3d 1053, 1061 (9th
Cir. 2012).
6 CARPENTERS V. BUILDING TRADES
resolution authorizing the AFL-CIO to charter a union to
compete with the Carpenters; the organization of a “Unity
Rally” in St. Louis; repeated public criticism of the
Carpenters on websites and in other publications; filing
frivolous regulatory claims against the Carpenters; stealing
confidential information; forcing the Carpenters’ Seattle legal
counsel to terminate its relationship with the Carpenters; and
orchestrating the June 2011 termination of an affiliation
agreement (the “Solidarity Agreement”) between the
Carpenters and the Metal Trades Department, AFL-CIO.
The Carpenters’ complaint also alleges acts of vandalism
and threats of force, such as: vandalism of Carpenters’ job
sites and property; death threats against Carpenters’ officials
and representatives; threats of violence at Pier 66 in Seattle;
and the public dissemination of video footage of a violent
attack on Carpenters’ members.
Although the Carpenters have not acceded to the Building
Trades’ demands, they allegedly have suffered significant
harm, including: “lost members and dues, lost or reduced
promotion, contractual and/or membership recruitment
opportunities, lost job opportunities, positions and work
assignments, loss of confidential information, increased costs
due to the termination of contractual relations with its
attorneys, and substantial and irreparable loss of goodwill.”
The Carpenters, together with six subordinate labor
organizations and nineteen individual members, sued the
Building Trades and three of its officers and agents: James
Williams, Ron Ault, and David Molnaa.2 The Carpenters
2
Two other individuals named as defendants, Mark Ayers and Ed Hill,
were voluntarily dismissed.
CARPENTERS V. BUILDING TRADES 7
alleged nine claims, four under the Racketeer Influenced and
Corrupt Organizations Act’s private cause of action (“civil
RICO”), 18 U.S.C. § 1964(c), one under the Labor
Management Reporting and Disclosure Act (“LMRDA”),
29 U.S.C. § 411(a)(5), and four under state law.
Concluding that the Carpenters failed to allege proximate
causation or any predicate acts and also failed to join a
necessary defendant to obtain injunctive relief under the
LMRDA, the district court dismissed all of the Carpenters’
federal claims. See Fed. R. Civ. P. 12(b)(6). The court also
declined to exercise supplemental jurisdiction over the state
claims. Finally, although the Carpenters had not previously
amended their complaint, the court declined to grant leave to
amend on the ground of futility. The Carpenters timely
appealed.
II
RICO provides a private cause of action for “[a]ny person
injured in his business or property by reason of a violation of
[18 U.S.C. § 1962].” 18 U.S.C. § 1964(c). Subsections
1962(a) through (c) prohibit certain “pattern[s] of
racketeering activity” in relation to an “enterprise.”
Subsection 1964(d) makes it illegal to conspire to violate
subsections (a), (b), and (c) of section 1962.
“The elements of a civil RICO claim are as follows:
(1) conduct (2) of an enterprise (3) through a pattern (4) of
racketeering activity (known as ‘predicate acts’) (5) causing
injury to plaintiff’s business or property.” Living Designs,
Inc. v. E.I. Dupont de Nemours & Co., 431 F.3d 353, 361 (9th
Cir. 2005) (internal quotation marks and citation omitted).
“[R]acketeering activity” includes, inter alia, “any act which
8 CARPENTERS V. BUILDING TRADES
is indictable” under the Hobbs Act, 18 U.S.C. § 1951, or “any
act or threat involving . . . extortion, . . . which is chargeable
under State law.” 18 U.S.C. § 1961(1)(A), (B).
The primary issue in this appeal is whether the Carpenters
plausibly alleged any predicate acts, under either the Hobbs
Act or state extortion law.
A
“Extortion” under the Hobbs Act, “means the obtaining of
property from another, with his consent, induced by wrongful
use of actual or threatened force, violence, or fear, or under
color of official right.” 18 U.S.C. § 1951(b)(2). The
Carpenters’ complaint alleges that the Building Trades
applied intense economic pressure in an effort to force them
to surrender their money and submit to Building Trades
control.
Fear, in the context of the Hobbs Act, can include fear of
economic loss. See, e.g., Levitt v. Yelp! Inc., No. 11-17676,
2014 WL 4290615, at *8 (9th Cir. Sept. 2, 2014); United
States v. Greger, 716 F.2d 1275, 1278–79 (9th Cir. 1983);
Rennell v. Rowe, 635 F.3d 1008, 1012 (7th Cir. 2011);
Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d
494, 522 (3d Cir. 1998) (“The term ‘fear’ includes the fear of
economic loss.”). But “there is nothing inherently wrongful
about the use of economic fear to obtain property.” United
States v. Sturm, 870 F.2d 769, 773 (1st Cir. 1989). “[T]he
fear of economic loss is a driving force of our economy that
plays an important role in many legitimate business
transactions.” Brokerage Concepts, Inc., 140 F.3d at 523.
Courts must therefore differentiate between legitimate use of
economic fear—hard bargaining—and wrongful use of such
CARPENTERS V. BUILDING TRADES 9
fear—extortion. See, e.g., George Lussier Enters., Inc. v.
Subaru of New England, Inc., 393 F.3d 36, 50 (1st Cir. 2004).
“Distinguishing between hard bargaining and extortion can be
difficult.” Rennell, 635 F.3d at 1011.
For guidance, courts have turned to United States v.
Enmons, 410 U.S. 396 (1973). See, e.g., Rennell, 635 F.3d at
1011; Brokerage Concepts, Inc., 140 F.3d at 522. In Enmons,
the Court held that a defendant violates the Hobbs Act only
“where the obtaining of the property would itself be
‘wrongful’ because the alleged extortionist has no lawful
claim to that property. 410 U.S. at 400. Defending against an
accusation of extortion “based on a lawful claim to the
property obtained has been dubbed the ‘claim of right’
defense to extortion.” Brokerage Concepts, Inc., 140 F.3d at
522.
Where violence or violent threats are concerned, the claim
of right defense is strictly limited to employer-union labor
disputes. United States v. Daane, 475 F.3d 1114, 1119–20
(9th Cir. 2007); see also Brokerage Concepts, Inc., 140 F.3d
at 523 & n.21 (collecting cases). But courts have recognized
a claim of right defense where property is obtained through
the use of fear of economic loss, which is not “‘inherently’
wrongful.” Id. at 523; see also, e.g., United States v. Vigil,
523 F.3d 1258, 1262–63 (10th Cir. 2008). “Fear of economic
loss is not an inherently wrongful means; however, when
employed to achieve a wrongful purpose, its ‘use’ is
wrongful.” United States v. Clemente, 640 F.2d 1069, 1077
(2d Cir. 1981).
Thus, following Enmons, using fear of economic loss to
obtain personal payoffs or payments for “imposed, unwanted,
superfluous and fictitious services,” 410 U.S. at 400, may
10 CARPENTERS V. BUILDING TRADES
well be extortionate. See, e.g., Vigil, 523 F.3d at 1265
(finding extortion where government official used economic
pressure to obtain personal payoff by imposing unwanted
employee who was unwilling to work). In either case, the
transaction used to obtain the property of another may be
illegitimate and the use of economic pressure may be
wrongful.
1
Even where the Push-Back-Carpenters Campaign
involved legitimate means, such as chartering competing
unions, it was still extortionate, according to the Carpenters,
because it was directed toward a wrongful end—coercing the
Carpenters into accepting “stale, outdated and
anticompetitive” services that “are unrequested, unwanted
and unnecessary.”
The Carpenters’ complaint does not plausibly allege that
the Building Trades demanded any sort of personal payoffs.
See, e.g., Gregor, 716 F.2d at 1278–79; Clemente, 640 F.2d
at 1073. Instead, it contends that the Building Trades’
services are unwanted and would provide nothing of value to
the Carpenters. But none of the cases cited by the Carpenters
allows a Hobbs Act conviction based on unwanted or
subjectively valueless services in the context of an economic
pressure campaign.
A claim of right defense will not protect someone who
obtains the property of another in return for “imposed,
unwanted, superfluous and fictitious” services. Enmons,
410 U.S. at 400 (emphasis added) (citing United States v.
Kemble, 198 F.2d 889 (3d Cir. 1952)). Fear cannot be used
to force an “employer to pay wages for an additional worker
CARPENTERS V. BUILDING TRADES 11
to do exactly what another worker [is] already being paid to
do.” Viacom Int’l, Inc. v. Icahn, 747 F. Supp. 205, 212
(S.D.N.Y. 1990) (citing Kemble, 198 F.2d 889).
So in Vigil, the case the Carpenters rely upon most
heavily, the Tenth Circuit affirmed a Hobbs Act extortion
conviction where the victim was required to “hire a specific
and unwanted individual at the price she sets.” 523 F.3d at
1265. Vigil, the New Mexico State Treasurer, insisted that
the victim hire an unnecessary employee because he, Vigil,
owed the potential employee’s husband money. Id. at 1261.
Even though the prospective employee “did not want to work
for the compensation,” Vigil tried to coerce the victim into
paying her 40% of the gross income from a government
contract. See id. at 1262. Not only were her services
“unwanted” but “the compensation was intended as personal
payoff to [Vigil’s] former associate . . . rather than to achieve
a legitimate objective.” Id. at 1265. That was extortion,
according to the court.3 But, unlike Vigil, there is no
plausible allegation here that any Building Trades official
sought a “personal payoff,” or misappropriated a
governmental position.
More fundamentally, a claim of right defense cannot be
defeated by a contention that a particular transaction has no
“subjective” or “idiosyncratic” value. See, e.g., Viacom Int’l,
747 F. Supp. at 212 n.7 (noting that a forced transaction was
extortionate where “[n]othing of objective value transferred
to the plaintiff” (emphasis added)). Otherwise any plaintiff
could bring a civil RICO claim based on a bare allegation that
whatever service or good he received in return for his
property was of no subjective value. However little value the
3
We need not and do not decide whether Vigil was correctly decided.
12 CARPENTERS V. BUILDING TRADES
Carpenters thinks the Building Trades might provide, its
services are not the equivalent of Christopher Moltisanti’s
“no show” construction job. See The Sopranos: Episode 402,
No Show (HBO).
2
The Push-Back-Carpenters Campaign was also
extortionate, according to the Carpenters, because it used
wrongful means, such as filing frivolous regulatory claims, or
misusing confidential membership information. The
Carpenters’ argument relies on a frequently cited passage in
Viacom International, where the district court distinguished
hard bargaining from extortion by noting that, in the latter,
the victim “has a pre-existing entitlement to pursue his
business interests free of the fear he is quelling by receiving
value in return for transferring property to the defendant.”
747 F. Supp. at 213. Because the Carpenters had a legal right
to be free from frivolous regulatory claims or misused
confidential information, it maintains, the Building Trades’
conduct was extortionate. Under that approach, any
economic pressure campaign that includes tortious conduct,
for example, would be a predicate offense to civil RICO,
regardless of whether the alleged tortfeasor demanded
payment to refrain from harming the victim.
As the Building Trades contends, use of economic
pressure is wrongful if the victim “had a pre-existing right to
the purported consideration being offered by the defendant as
an inducement to enter into the transaction.” If so, “there is
no legitimacy to the proposed transaction.” For example, in
Rennell, the defendant terminated a joint venture and gave his
former partner a take-it-or-nothing offer of 8% of what he
owed. 635 F.3d at 1009, 1013. Still, the defendant had a
CARPENTERS V. BUILDING TRADES 13
claim of right to his former partner’s interest in the joint
venture: he had a right to terminate the venture agreement.
Id. at 1012–13. And even if the defendant breached the
parties’ contracts or “acted in violation of the general duty of
good faith and fair dealing,” he did not forfeit his claim of
right defense. Id. at 1014. Such claims “should be pursued
through state-law theories of contract and, perhaps, tort—not
civil RICO.” Id.
Clearer still is Brokerage Concepts, Inc., where an HMO
required a pharmacy to use its subsidiary as a third-party
provider if the pharmacy wanted access to the HMO’s
provider network. 140 F.3d at 525. If the HMO had been
legally compelled to grant access to its network, the
pharmacy “would have had a legal entitlement to be a
member of the provider network and thus to be free of the
fear that it would be excluded from that network.” Id. at 526.
But as the HMO was not legally compelled to grant access, its
use of economic pressure was not wrongful.
In both of those cases, the decisive question was whether
the victim had a pre-existing statutory or contractual right to
the consideration offered by the defendant in return for the
victim’s property. If so, the resulting transaction would have
been an illegitimate sham, and potentially a “wrongful” goal
to pursue.
But none of the cases cited by the Carpenters involves an
economic pressure campaign declared “wrongful” because it
happened to include, incidentally, tortious conduct or simple
breach of contract. For those cases to be on point, the
14 CARPENTERS V. BUILDING TRADES
Carpenters would need to have a statutory or contractual right
to the services the Building Trades offers, which it does not.4
We recently held that a lawyer’s threat to a engage
potential witness to “do ‘whatever it is we need her to do,’
including impeding the investigation, lying to [an]
investigating Assistant U.S. Attorney . . . , and repeating
those lies to the grand jury” was “unlawful, and therefore
clearly wrongful under the circumstances.” United States v.
Villalobos, 748 F.3d 953, 955, 957 (9th Cir. 2014).
Villalobos did not, however, hold that conduct must be
characterized as wrongful if it involves a breach of duty
derived from contract or tort law in the course of pursuing a
legitimate transaction. The proper remedy for such a breach
is a claim under state law. And the Carpenters’ complaint
does not allege a violation of the Hobbs Act through the use
of economic fear merely because the Building Trades might
have committed some tort or breached some contract as part
of the Push-Back-Carpenters Campaign.
4
In addition to being unsupported by precedent, the Carpenters’
argument invites us to declare extortionate under the Hobbs Act any
economic pressure campaign involving, no matter how incidentally, any
violation of state law. Such a declaration would transform innumerable
state crimes and torts into federal crimes. But the Supreme Court has
reminded us just recently that we should refrain from interpreting federal
statutes to “‘alter sensitive federal-state relationships’” by “convert[ing]
an astonishing amount of ‘traditionally local criminal conduct’ into ‘a
matter for federal enforcement.’” Bond v. United States, 134 S. Ct. 2077,
2091 (2014) (quoting United States v. Bass, 404 U.S. 336, at 349–50
(1971)).
CARPENTERS V. BUILDING TRADES 15
B
By contrast, use of “actual or threatened force or violence
to obtain property” is “inherently wrongful” and not subject
to a claim of right defense. Daane, 475 F.3d at 1119–20
(quoting United States v. Sturm, 870 F.2d 769, 772–73 (1st
Cir. 1989)). The question, therefore, is whether the
Carpenters adequately alleged that the Building Trades, its
agents, or its coconspirators used violence or force against the
Carpenters or its members.
1
The Carpenters’ brief points to three factual allegations
that the Building Trades or a named defendant personally
threatened violence.
First, it asserts that “the Building Trades and Williams
publicly disseminated video footage of a violent attack o[n]
Carpenters’ members, accompanied by a written warning that
similar violence would ensue.” But the Building Trades did
not “publicly disseminate” the video. Instead, the Building
Trades disseminated a news release that mentioned a video
had “surfaced” on YouTube, but did not embed the video or
include a link. And the news release did not describe a
violent attack on the Carpenters, but a brawl that started when
one of the Carpenters “grab[bed] an Iron Worker.” The
release does not contain a warning of similar violence, just
the phrases “[c]raft unions are not taking this struggle lying
down,” and “the building trades unions turned out in force.”
Second, the Carpenters’ brief mentions materials on a
website that “direct and encourage violence.” Again, this
overstates the complaint, which describes one potentially
16 CARPENTERS V. BUILDING TRADES
troubling statement in an interview posted on the website:
“Defendant Ayers called the Carpenters ‘a cancer that is
spreading’ that needed to be confronted by ‘the kind of
powerful response you would expect when a burglar is caught
stealing something of value.’”
Finally, the brief describes “speeches containing anti-
Carpenters threats and incitements . . . to take violent
actions.” Hill said the Building Trades would do “whatever
it takes to protect our members”; Ayers called for a “united”
stand, warned that Building Trades members were “being
threatened all around the nation,” and declared that “[t]his
problem didn’t start in St. Louis, but by God it needs to end
in St. Louis”; and Williams noted a “line in the sand” and
explained “[a]fter today, there’s no going back.” Perhaps
recognizing that none of these statements sounds like a call
for violence, the complaint reiterates that each, “[i]n the
context of the past violence, . . . mean[t] to threaten and use
physical violence and force.”
In some contexts, such statements could constitute threats
of violence actionable under civil RICO5—the Carpenters’
brief cites no remotely comparable case, see Daane, 475 F.3d
at 1116–19—but not plausibly in this context. Prior to the
statements, the complaint alleges precisely one act of
vandalism by unnamed “Defendants’ agents,” and two
emailed “veiled death threats” against a Carpenters’ officer,
5
The Building Trades notes that holding such comments actionable
under civil RICO would raise significant First Amendment concerns. See
NAACP v. Claiborne Hardware Co., 458 U.S. 886, 900 n.28, 928 (1982)
(holding that Charles Evers’s statement at a rally, “that any ‘uncle toms’
who broke the boycott would ‘have their necks broken’ by their own
people,” was protected speech).
CARPENTERS V. BUILDING TRADES 17
without specifying how the individuals named as Defendants’
“agents” were connected to the Building Trades. The
complaint’s interpretation of the emails relies, in turn, on
“prior and contemporaneous violent vandalism,” but includes
only the one example—anonymous vandalism not connected
to the Building Trades.
The Carpenters’ complaint does not plausibly allege that
any defendant used threats of violence to obtain the
Carpenters’ property.
2
The Carpenters’ complaint also ties the Building Trades
to threats and violence by non-parties, whom it labels
coconspirators with and agents of the Building Trades.
Even in a complaint, formulaic recitations and
“conclusory statement[s]” will not suffice to allege
conspiracy plausibly. Kendall v. Visa U.S.A., Inc., 518 F.3d
1042, 1048 (9th Cir. 2008). A complaint must “answer the
basic questions: who, did what, to whom (or with whom),
where, and when?” Id. Bare assertions of “agreement,” id.
at 1047 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 557 (2007)), or identifications of particular persons as
“coconspirators,” id. at 1050, will not suffice.
The Carpenters’ complaint recites several “actions”
“undertaken . . . as part of, and in furtherance of, the unlawful
conspiracy,” but identifies the actors, if at all, merely as
“Defendants’ agents.” As to the actors who are actually
named, the complaint simply refers to them as “co-
conspirators,” who had “agreed to act, and w[ere] acting, on
behalf of the Defendants.” No detailed facts are alleged.
18 CARPENTERS V. BUILDING TRADES
Such rote recitations do not render plausible that the non-
parties conspired with the Building Trades or agreed with the
Building Trades to commit or threaten violence.6
Despite the Carpenters’ thorough briefing, its allegations
of agency boil down to three facts: First, the perpetrators of
various violent actions, most of whom are unnamed, are
labeled “Defendants’ agents.” But a mere label cannot
demonstrate an agency relationship. Second, subordinate
union members followed Defendants’ directions by engaging
in threats and violence. But those “directions,” described
above, simply did not amount to instructions to commit
violence. And in any case, the violent acts either predate the
Defendants’ statements, or postdate them by over a year.
Third, the Building Trades blessed and encouraged the
violence by disseminating a YouTube video. But, as
described above, the Building Trades’ news release hardly
amounts to blessing and encouraging violence.7
The Carpenters’ formulaic and conclusory allegations of
conspiracy and agency do not suggest plausibly that the
6
Terrence O’Sullivan, who made some of the most troubling statements
in the record—asking the Unity Rally audience “if anyone had any
rope?”—is identified in the complaint as a member of the Building
Trades’ Governing Board of Presidents. Even if he were a coconspirator,
holding his statements actionable would raise First Amendment concerns.
See supra, note 5.
7
The Carpenters’ RICO case statement alleges that Mark Keffler, during
a phone call with a Carpenters representative, threatened that “a lot of
pissed off people out there . . . will start killing [Carpenters] soon.” But
Keffler is merely labeled “Defendants’ agent,” with no supporting factual
assertions concerning his connection, if any, to the defendants.
CARPENTERS V. BUILDING TRADES 19
Building Trades or any named defendant attempted to acquire
the Carpenters’ property through violence or threats.
C
Even if the Carpenters failed to allege extortion under the
Hobbs Act, it argues that it has alleged “RICO predicate
offenses under twelve States’ extortion statutes.” For
example, some states do not provide a claim of right defense
to the use of fear to obtain a victim’s property, and others
prohibit threats of reputational harm. Boiled down, the
Carpenters’ brief suggests that any conduct criminalized
under any state’s “extortion” statute is a proper RICO
predicate offense.
This argument repeats the error of an argument rejected
long ago in United States v. Nardello, 393 U.S. 286 (1969),
which concerned the meaning of “extortion” in the Travel
Act, 18 U.S.C. § 1952. Nardello argued that the Act
encompassed only conduct labeled “extortion” by a state
statute, but not identical conduct labeled “blackmail,” for
example. Nardello, 393 U.S. at 293–94. Rejecting the
argument that the meaning of extortion was tethered to the
state statute, the Court held that the Act referred to conduct
“generically classified as extortionate,” that is to say,
“obtaining something of value from another with his consent
induced by the wrongful use of force, fear, or threats.” Id. at
290.
The same generic definition of extortion applies under
§ 1961(1)(A). Scheidler v. Nat’l Org. for Women, Inc.,
537 U.S. 393, 409 (2003). The Carpenters would expand that
definition to include any conduct labeled “extortion” under
any state statute. The district court correctly rejected that
20 CARPENTERS V. BUILDING TRADES
argument. Even if a state labels particular conduct extortion,
“it cannot qualify as a predicate offense for a RICO suit
unless it is capable of being generically classified as
extortionate.” Wilkie v. Robbins, 551 U.S. 537, 567 (2007)
(internal quotation marks and citation omitted). Whether
under the Hobbs Act or under the generic definition, use of
fear must be “wrongful” to be extortionate.8
In addition, the Carpenters’ brief contends that the
“generic definition of extortion, in contrast to the Hobbs Act,
does not require a showing that the defendant lacked a claim
of right to the property in question.” It labels the existence of
a claim of right an “affirmative defense” and cites United
States v. Velasquez-Bosque for the proposition that “[t]he
availability of an affirmative defense is not relevant to the
categorical analysis.” 601 F.3d 955, 963 (9th Cir. 2010)
(declaring irrelevant that California’s carjacking statute does
not permit a claim of right defense, whereas generic robbery
does). But whether the defendant had a legitimate claim to
the property obtained by use of economic fear, although
called a “claim of right” defense, is not actually an
“affirmative defense” in this context. Instead, it is an
interpretation of what “wrongful use of fear”—an element of
both Hobbs Act and generic extortion—means. See, e.g.,
Brokerage Concepts, Inc., 140 F.3d at 523. Thus, even if a
state criminalized the use of economic fear to achieve a
8
Regardless of whether such reasoning defies the canon against
superfluity, as the Carpenters’ brief asserts, it is compelled by Supreme
Court precedent. And, moreover, the rule against redundancy does not
require the Carpenters’ conclusion. If every state were to adopt the Hobbs
Act wholesale as its law criminalizing extortion, Congress’s choice of the
disjunctive would become “superfluous” by necessity.
CARPENTERS V. BUILDING TRADES 21
legitimate end,9 the state offense would not equal generic
extortion.
That leaves, as possible allegations of generic extortion in
violation of state law, the Building Trades’ alleged threats of
personal reputational harm to the Carpenters. See Nardello,
393 U.S. at 295–96 (attempt to obtain money by threatening
to “expose alleged homosexual conduct” fit within generic
extortion). The Carpenters’ brief does not cite any particular
portion of the record where the Building Trades threatened
and inflicted reputational harm, and our review of the
Carpenters’ complaint does not reveal any such plausible
allegations. See Levitt, 2014 WL 4290615, at *9 (noting that
a “claim of reputational harm” must be connected with “a
specific allegation of wrongful conduct”).
III
Nineteen Carpenters’ members allege that officers Ault,
Williams, and Molnaa violated the LMRDA “by directing the
unlawful suspension or expulsion of the Carpenters and the
Individual Plaintiffs through the revocation of the Solidarity
Agreements” without written charges or a hearing. On
9
None of the cases cited by the Carpenters concern extortion by fear of
economic loss. All concern fear of threatened violence, for which there
is no claim of right defense, except in a specific labor context, under the
Hobbs Act. See Gomez v. Garcia, 81 F.3d 95, 96 (9th Cir. 1996) (holding
no claim of right defense for threat with a gun); Rael v. Sullivan, 918 F.2d
874, 875 (10th Cir. 1990) (holding no claim of right defense for threat to
“kick [victim’s] ass”); State v. Logan, 29 So. 336 (La. 1901) (holding no
claim of right defense for threat to kill); Pierce v. Commonwealth, 138
S.E.2d 28, 31–32 (Va. 1964) (holding no claim of right defense for threat
from loaded pistol).
22 CARPENTERS V. BUILDING TRADES
appeal, they argue that such automatic expulsions are
unlawful.
Under the heading “Safeguards against improper
disciplinary action,” LMRDA § 101(a)(5) provides that:
No member of any labor organization may be
fined, suspended, expelled, or otherwise
disciplined except for nonpayment of dues by
such organization or by any officer thereof
unless such member has been (A) served with
written specific charges; (B) given a
reasonable time to prepare his defense;
(C) afforded a full and fair hearing.
29 U.S.C. § 411(a)(5) (emphasis added).
The Carpenters’ members were not expelled from the
Metal Trades as a disciplinary action. See Merriam-
Webster’s Collegiate Dictionary 356 (11th ed. 2005)
(defining “to discipline” as “to punish or penalize for the sake
of discipline”); Black’s Law Dictionary 531 (9th ed. 2009)
(defining “discipline” as “[p]unishment intended to correct or
instruct; esp., a sanction or penalty imposed after an official
finding of misconduct”). Both the text and immediate context
of section 101(a)(5) suggest that automatic expulsion without
written charges and a full hearing is only a violation where
the expulsion is disciplinary. First, the phrase “otherwise
disciplined” limits the reach of the first three verbs—“fined,
suspended, expelled”—to disciplinary actions, a limitation
that is also implied by the heading. See, e.g., Ram v. INS,
243 F.3d 510, 514 & n.3 (9th Cir. 2001) (noting that a
section’s heading may be useful in interpreting its meaning).
Second, such procedural protections make little sense where
CARPENTERS V. BUILDING TRADES 23
an expulsion is not a disciplinary action, but the result of a
dissolved affiliation agreement between competing labor
unions.
Furthermore, the cases cited by the Carpenters concern
disciplinary expulsions and are, therefore, not on point. See,
e.g., Myers v. Affiliated Prop. Craftsmen Local No. 44,
667 F.2d 817, 821 (9th Cir. 1982). If the Carpenters’
members were correct under the statute, then either
termination of such affiliation agreements would become
practically impossible or the “full and fair hearing[s]”
guaranteed by the statute would become a farce. Neither
result is required by the statute or the case law.
IV
Although the Carpenters did not request leave to amend
its complaint, it contends on appeal that the district court
abused its discretion by denying such leave.
Whether to grant leave to amend is committed to the
sound discretion of the district court. Foman v. Davis,
371 U.S. 178, 182 (1962). “[W]e first look,” therefore, “to
whether the trial court identified and applied the correct legal
rule . . . . Second, we look to whether the trial court’s
resolution . . . resulted from a factual finding that was
illogical, implausible, or without support in inferences that
may be drawn from the facts in the record.” United States v.
Hinkson, 585 F.3d 1247, 1263 (9th Cir. 2009) (en banc).
The district court identified and applied the correct legal
rule. It recognized our repeated admonition that “a district
court should grant leave to amend even if no request to
amend the pleading was made, unless it determines that the
24 CARPENTERS V. BUILDING TRADES
pleading could not possibly be cured by the allegation of
other facts.” Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir.
2000) (en banc) (quoting Doe v. United States, 58 F.3d 494,
497 (9th Cir. 1995)). And it properly cited the five factors to
be considered “in assessing the propriety of leave to
amend—bad faith, undue delay, prejudice to the opposing
party, futility of amendment, and whether the plaintiff has
previously amended the complaint.” United States v.
Corinthian Colleges, 655 F.3d 984, 995 (9th Cir. 2011).
Nonetheless, the court declined to grant leave to amend as
futile. Specifically, it noted the exhaustive length of the
Carpenters’ complaint and explained that it could not
“conceive of any new facts that could possibly cure the
pleading.”
We are unable to say that the district court’s finding is
illogical, implausible, or without support in the record. In
fact, it is quite reasonable to suppose that the Carpenters’
“sprawling 246-page” complaint contained all of the key facts
supporting its claims against the Building Trades. The
Carpenters’ brief suggests it could have cured the pleading’s
failure to allege an agency relationship between the Building
Trades and those individuals who committed violent and
threatening acts. But neither the brief nor counsel’s oral
argument has suggested specific facts that might have cured
such deficiency.
V
We conclude that the Carpenters’ complaint fails to state
a claim under civil RICO or the LMRDA against the Building
CARPENTERS V. BUILDING TRADES 25
Trades, and that the district court did not abuse its discretion
in denying leave to amend.
AFFIRMED.