Camelio v. American ( 1998 )


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    UNITED STATES COURT OF APPEALS
    FOR THE FIRST CIRCUIT
    ____________________

    No. 97-1355

    AUGUSTUS JOHN CAMELIO,
    Plaintiff - Appellant,

    v.

    AMERICAN FEDERATION, ETC., ET AL.,
    Defendants - Appellees.

    ____________________

    APPEAL FROM THE UNITED STATES DISTRICT COURT

    FOR THE DISTRICT OF MASSACHUSETTS

    [Hon. William G. Young, U.S. District Judge] ___________________

    ____________________

    Before

    Torruella, Chief Judge, ___________

    Godbold,* Senior Circuit Judge, ____________________

    and Barbadoro,** District Judge. ______________

    _____________________

    Lee H. Kozol, with whom Debra Dyleski-Najjar, Penny Kozol _____________ ____________________ ___________
    and Friedman & Atherton were on brief for appellant. ___________________
    Andrew D. Roth, with whom Devki K. Virk, Bredhoff & Kaiser, ______________ _____________ __________________
    P.L.L.C., William J. Hardy, Prescott M. Lassman and Kleinfeld, ________ ________________ ___________________ __________
    Kaplan & Becker were on brief for appellees. _______________



    ____________________

    March 5, 1998
    ____________________

    ____________________

    * Of the Eleventh Circuit, sitting by designation.

    ** Of the District of New Hampshire, sitting by designation.












    BARBADORO, District Judge. Augustus Camelio, a former BARBADORO, District Judge. _______________

    employee and member of a labor union, brought this suit in state

    court against the union and fourteen members of its leadership.

    Camelio alleges that defendants had him fired from his job and

    forced him out of the union in violation of the Racketeer

    Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C.A.

    1961-1968 (West 1994 & Supp. 1997), and several provisions of

    Massachusetts state law. After defendants removed the case to

    federal court, the district court below dismissed Camelio's RICO

    claim and several of his state law causes of action for failure

    to state a claim. The court then remanded the remaining claims

    to state court. Camelio appeals the dismissal of his federal and

    state claims. We affirm in part, concluding that the court

    properly dismissed his RICO claim. We disagree, however, with

    the district court's decision to dismiss the state law causes of

    action. Rather than dismissing these claims, the court should

    have remanded them to state court along with the rest of the

    state law claims.

    I. BACKGROUND1 I. BACKGROUND1 __________

    Augustus Camelio served for nearly thirty years as

    General Counsel to Council 93 of the American Federation of

    State, County and Municipal Employees ("AFSCME"). In 1995, the

    United States Department of Labor and the Internal Revenue
    ____________________

    1 As this appeal arises from a dismissal for failure to state a
    claim, we treat as true the complaint's well-pleaded allegations
    and construe those allegations in Camelio's favor. See, e.g., ___ ____
    Miranda v. Ponce Fed. Bank, 948 F.2d 41, 43 (1st Cir. 1991); _______ ________________
    Nodine v. Textron, Inc., 819 F.2d 347 (1st Cir. 1987). ______ _____________

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    Service initiated investigations into Council 93's financial

    affairs that threatened to expose an ongoing scheme to

    misappropriate union funds by several members of the union's

    leadership. In response, Camelio alleges, defendants engaged in

    a concerted effort to thwart the two federal investigations.

    Camelio launched his own investigation into Council

    93's financial affairs after learning of the federal inquiries.

    He claims that the individual defendants, all members of the

    union leadership, initially rebuffed his requests for information

    and later had him fired when he persisted with his investigation.

    Camelio continued to investigate even after he lost his job, this

    time relying on his right as a union member to inspect the

    union's books and records. He also announced his candidacy for

    vice president of AFSCME's northern New England region, a

    position that would allow him to further his investigation. In

    an attempt to thwart Camelio's candidacy and keep him from

    uncovering any evidence of defendants' criminal scheme, however,

    several of the individual defendants first threatened Camelio and

    ultimately forced him out of the union when their threats were

    not heeded.

    Camelio sued Council 93 and the individual defendants

    in Massachusetts state court. He alleged claims based on

    Massachusetts law for breach of contract, wrongful discharge,

    tortious interference with contract, violations of the state

    constitution, intentional and negligent infliction of emotional

    distress, defamation, and false light invasion of privacy. He


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    also alleged that the individual defendants violated the federal

    RICO statute. See 18 U.S.C.A. 1962(c), 1964(c). ___

    Relying on Camelio's RICO claims, defendants removed

    the case to federal court in the District of Massachusetts. See ___

    28 U.S.C.A. 1441(a)&(b) (West 1994). Defendants then moved to

    dismiss for failure to state a claim. The district court allowed

    Camelio to amend his complaint to more specifically state his

    allegations, but ultimately concluded that he had failed to

    sufficiently allege a RICO claim against any of the defendants.

    The court also dismissed three of Camelio's state law claims

    against all defendants (breach of contract, negligent infliction

    of emotional distress, and false light invasion of privacy) and

    parts of two other claims as to some defendants (state

    constitutional violations and intentional infliction of emotional

    distress) before remanding the remaining claims to state court.

    II. DISCUSSION II. DISCUSSION __________

    The district court dismissed Camelio's RICO claims

    because it concluded Camelio's complaint failed to sufficiently

    allege that his injuries were proximately caused by any of the

    predicate acts of racketeering on which the RICO claims were

    based. The court gave only a cursory explanation for its

    dismissal of the state law claims over which it retained

    jurisdiction. Camelio challenges both rulings.

    A. The RICO Claims A. The RICO Claims _______________

    In addition to criminal penalties, RICO provides a

    private right of action for treble damages and attorneys fees to


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    "[a]ny person injured in his business or property by reason of a

    violation of section 1962." 18 U.S.C.A. 1964(c). Camelio

    bases his RICO claims on 1962(c), which makes it unlawful for

    any person to conduct the affairs of an enterprise affecting

    interstate commerce by means of a "pattern of racketeering

    activity." 18 U.S.C.A. 1962(c). The Act also provides a list

    of actions and statutory violations that constitute "racketeering

    activity" and states that a "pattern" of such activity requires

    at least two acts of racketeering. 18 U.S.C.A. 1961(1)&(5).

    When a plaintiff attempts to base a civil RICO claim on

    1962(c), that claim cannot succeed unless the injuries of which

    the plaintiff complains were caused by one or more of the

    specified acts of racketeering.2 Miranda v. Ponce Fed. Bank, _______ ________________

    948 F.2d 41, 46-7 (1991). Moreover, merely proving that the

    alleged predicate acts were a "cause in fact" of plaintiff's

    injuries will not be sufficient. Instead, 1964(c) requires

    proof that at least one of the defendant's predicate acts was the

    proximate cause of the plaintiff's injuries. Holmes v. ______

    Securities Investor Protection Corp., 503 U.S. 258, 268 (1992). ____________________________________

    Camelio alleges that defendants injured him by

    depriving him of his property interests in his job and his union

    membership. He asserts that defendants engaged in the following

    pattern of RICO predicate acts: misappropriation of funds in

    ____________________

    2 Although it is not at issue in this case, this court has held
    that the same causation requirement applies to RICO conspiracy
    claims under 1962(d). Miranda v. Ponce Fed. Bank, 948 F.2d 41, _______ _______________
    48 & n.9 (1st Cir. 1991).

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    violation of 29 U.S.C.A. 501(c) (West 1985); attempted

    extortion in violation of the Hobbs Act, 18 U.S.C.A. 1961(1)

    (West 1984 & Supp. 1997); and obstruction of justice in violation

    of 18 U.S.C.A. 1510 and 1512 (West 1984 & Supp. 1997).3 In

    his complaint, Camelio asserts a myriad of claims in various

    combinations against fourteen individual defendants as well as

    against Council 93. For the sake of clarity of our analysis, we

    treat all of the defendants together, rather than individually.4

    Accordingly, to satisfy RICO's causation requirement at the

    motion to dismiss stage, Camelio's complaint must allege that the

    injuries of which he complains were proximately caused by one or

    more of these predicate acts. We examine the sufficiency of the

    complaint's causation allegations by addressing each category of

    predicate acts in turn.

    1. Misappropriation of Funds Claims ________________________________

    Camelio claims that nine of the fourteen individual

    defendants misappropriated union funds in violation of 18

    U.S.C.A. 501(c) by taking such funds for personal use and

    causing union money to be paid for legal services that were never

    rendered.

    A violation of 501(c) qualifies as a predicate

    racketeering act under RICO. See 29 U.S.C.A. 1961(1). ___
    ____________________

    3 Camelio alleges these violations in various combinations
    against each of the fourteen individual defendants. In no event
    does he allege less than two violations against any one
    defendant.

    4 For the sake of clarity, we treat Camelio's allegations
    against the defendants collectively.

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    However, even if we assume that Camelio has sufficiently alleged

    that defendants violated 501(c), these violations cannot

    satisfy RICO's causation requirement because the connection

    between the violations and Camelio's injuries is insufficiently

    close to say that one proximately caused the other. See Miranda, ___ _______

    948 F.2d at 47 (bribery not cause of plaintiff's job loss); Pujol _____

    v. Shearson/American Express, Inc., 829 F.2d 1201, 1205 (mail and _______________________________

    wire fraud not proximate cause of plaintiff's job loss); Nodine, ______

    819 F.2d at 349 (mail and wire fraud not cause of plaintiff's job

    loss). In other words, even if defendants did violate 501(c)

    by stealing union funds, their misappropriations were too far

    removed from Camelio's loss of his job and his union membership

    to serve as the proximate cause of his injuries.

    2. Extortion Claims ________________

    Camelio continued his investigation after he lost his

    job, relying on his right as a union member to inspect the

    union's financial records. See 29 U.S.C.A. 431(c) (West ___

    1985). He also announced his candidacy for vice president of the

    union's northern New England region. Camelio claims that several

    of the defendants attempted to stifle his investigation and force

    him to abandon his candidacy by threatening to deprive him of his

    membership in the union if he did not desist. He asserts that

    such conduct violates the Hobbs Act, 18 U.S.C.A. 1951(a), a

    crime which qualifies as a predicate act under RICO. See 18 ___

    U.S.C.A. 1961(1).




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    Like Camelio's misappropriation claims, his Hobbs Act

    claims cannot satisfy RICO's causation requirement because the

    Hobbs Act violations he alleges did not cause the loss of either

    his job or his union membership. The Hobbs Act punishes any

    person who "obstructs, delays or affects commerce . . . by

    robbery or extortion or attempts or conspires to do so." 18

    U.S.C.A. 1951(a). The Act defines "extortion" as "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.A. 1951(b)(2)

    (emphasis added). If Camelio's complaint successfully pleads any

    Hobbs Act violations, those violations resulted from defendants'

    attempts to induce Camelio to abandon certain property rights

    attendant to his union membership (e.g., his right to inspect the

    union's financial records and his right to seek union office).

    As Camelio concedes that these attempts did not succeed, they

    could not have caused his injuries. Instead, the complaint

    alleges that Camelio's injuries were actually caused by

    defendants' unilateral acts which, although reprehensible, do not

    violate the Hobbs Act.5
    ____________________

    5 Camelio alleges that defendants, acting in various
    combination: denied him the right to attend a union hearing;
    changed the means of collecting union dues so as to put his dues
    in arrears and thereby deprive him of his status as a union
    member; rebuffed his subsequent efforts to pay his dues; declared
    him ineligible to seek office within the union and removed his
    name from the ballot; and denied his repeated requests for a
    hearing on the issue of his membership. Such unilateral acts,
    though possibly unlawful on some other grounds, do not fall under
    the express terms of the Hobbs Act, which prohibits only "the
    obtaining of property from another, with his consent, induced by ____ ___ _______

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    3. Obstruction of Justice Claims _____________________________

    Camelio's final argument is that defendants are liable

    under RICO because they engaged in a campaign of obstructive

    conduct in violation of two federal criminal statutes, 18

    U.S.C.A. 1510 and 1512. Violations of these statutes

    constitute predicate acts of "racketeering activity" under RICO.

    See 18 U.S.C.A. 1961(1). Further, Camelio has sufficiently ___

    alleged that defendants' obstructive conduct caused his injuries

    to satisfy RICO's proximate cause requirement. Camelio's final

    attempt to salvage his RICO claims fails, however, because the

    conduct of which he complains does not violate either obstruction

    statute.

    The two statutes on which Camelio relies are similar in

    focus and effect. Section 1510(a) makes it a crime for any

    person to "willfully endeavor[] by means of bribery to obstruct,

    delay, or prevent the communication of information relating to a

    violation of any criminal statute . . . to a criminal

    investigator." 18 U.S.C.A. 1510(a). Similarly, 1512(a)(2)

    punishes any person who "intentionally harasses another person

    and thereby hinders, delays, prevents, or dissuades any person

    ____________________

    wrongful use of actual or threatened force, violence, or fear."
    18 U.S.C. 1951(b)(2) (emphasis added); see also Evans v. United ________ _____ ______
    States, 504 U.S. 255, 265 (1992) (reasoning that where the ______
    defendant is a private actor -- and not a public official
    extorting under color of official right -- "the victim's consent _______
    must be induced by wrongful use of actual or threatened force,
    violence or fear.") (emphasis added) (internal quotations
    omitted); United States v. Bucci, 839 F.2d 825, 827 (1st Cir.), _____________ _____
    cert. denied, 488 U.S. 844 (1988); United States v. Hathaway, 534 _____ ______ _____________ ________
    F.2d 386, 393 (1st Cir.), cert. denied, 429 U.S. 819 (1976). _____ ______

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    from . . . reporting to a law enforcement officer . . . the

    commission . . . of a Federal offense." 18 U.S.C.A.

    1512(c)(2). Both statutes focus on a specific step in the

    criminal investigatory process, namely the "communication" or

    "reporting" of information to criminal investigators. See, e.g., ___ ____

    United States v. Siegel, 717 F.2d 9, 20 (2d Cir. 1983) (in order _____________ ______

    to convict under 1510(a), prosecution must prove that defendant

    had a reasonably founded belief that information had or was about

    to be given to a federal investigator); United States v. San _____________ ___

    Martin, 515 F.2d 317, 320-21 (5th Cir. 1975) (prosecution must ______

    prove that "[defendant] knew or reasonably believed that

    [informant] had information which she had given or would give" to

    federal investigators).

    The conduct on which Camelio bases his claims falls

    outside the scope of both statutes because he alleges that

    defendants engaged in their obstructive conduct in an effort to

    prevent him from uncovering information of wrongdoing rather than

    to prevent him from reporting information he had already

    uncovered. Conduct that is aimed only at preventing a private

    citizen from uncovering evidence of a crime, while undeniably

    wrong, is not within the purview of either obstruction of justice

    statute. Accordingly, Camelio cannot save his RICO claims by

    relying on either statute.

    This is the fourth time in recent years that we have

    been called upon to evaluate the sufficiency of a RICO claim

    arising from an employment dispute. In all four cases, the claim


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    has failed to survive a motion to dismiss. See, e.g., Miranda, ___ ____ _______

    948 F.2d at 47; Pujol, 829 F.2d at 1205; Nodine, 819 F.2d at 349. _____ ______

    Although we are not prepared today to address the issue in a

    categorical fashion, we emphasize the court's statement in

    Miranda: "While it may be theoretically possible to allege a _______

    wrongful discharge which results directly from the commission of

    a RICO predicate act . . . any such safe harbor would be severely

    circumscribed." 948 F.2d at 41. Whatever the future may hold

    for this category of claims, Camelio's RICO claims are well

    outside any safe harbor that may exist.

    B. The State Law Claims B. The State Law Claims ____________________

    After properly dismissing Camelio's RICO claims, the

    district court proceeded to dismiss three of his state law claims

    against all of the defendants (breach of contract, negligent

    infliction of emotional distress, and false light invasion of

    privacy) and parts of two other claims as to several individual

    defendants (state constitutional violations and intentional

    infliction of emotional distress). The court then declined to

    exercise supplemental jurisdiction over the remaining claims and

    remanded them to state court. Camelio challenges the court's

    dismissal of the state law claims. Rather than addressing the

    merits of these claims, we conclude that the court erred in

    retaining supplemental jurisdiction over the state law claims

    after it dismissed the federal claims on which jurisdiction was

    based.




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    A federal court exercising original jurisdiction over

    federal claims also has "supplemental jurisdiction over all other

    claims that are so related to the claims in the action within

    such original jurisdiction that they form part of the same case

    or controversy under Article III of the United States

    Constitution." 28 U.S.C.A. 1367(a) (West 1993). If, however,

    the court dismisses the foundational federal claims, it must

    reassess its jurisdiction, this time engaging in a pragmatic and

    case-specific evaluation of a variety of considerations that may

    bear on the issue. Roche v. John Hancock Mut. Life Ins. Co., 81 _____ _______________________________

    F.3d 249, 256-57 (1st Cir. 1996). Among the factors that will

    often prove relevant to this calculation are the interests of

    fairness, judicial economy, convenience, and comity. Id. Comity ___

    is a particularly important concern in these cases. As the

    Supreme Court observed in United Mine Workers v. Gibbs, 383 U.S. ____________________ _____

    715, 726 (1966),

    Needless decisions of state law should be
    avoided both as a matter of comity and to
    promote justice between the parties, by
    procuring for them a surer-footed reading of
    applicable law. Certainly, if the federal
    claims are dismissed before trial, even
    though not unsubstantial in a jurisdictional
    sense, the state claims should be dismissed
    as well.

    Accordingly, the balance of competing factors ordinarily will

    weigh strongly in favor of declining jurisdiction over state law

    claims where the foundational federal claims have been dismissed

    at an early stage in the litigation. See Rodr guez v. Doral ___ _________ _____

    Mortgage Corp., 57 F.3d 1168, 1177 (1st Cir. 1995). ______________


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    A variety of factors counsel against retention of

    jurisdiction over the state law claims in this case. First, the

    court dismissed the only federal claims well before trial under

    circumstances in which the parties would not be unfairly

    prejudiced by a remand of the state law claims. Second, it does

    not appear that the district court's disposition of some but not

    all of the state law claims will materially shorten the time it

    will take to resolve the parties' dispute as the remanded claims

    concern the same nucleus of operative fact as the dismissed

    claims. Third, and perhaps most importantly in this case, the

    claims that the court dismissed raise substantial questions of

    state law that are best resolved in state court. For all of

    these reasons, we hold that the district court erred in retaining

    jurisdiction over the state law claims.

    III. CONCLUSION III. CONCLUSION __________

    For the foregoing reasons, we conclude that the

    district court properly dismissed Camelio's RICO claims. Having

    dismissed the federal claims, however, the court should have

    refrained from exercising supplemental jurisdiction over

    Camelio's state law claims and remanded them to state court.

    The district court's dismissal of Camelio's RICO claims

    is affirmed. As to the supplemental state law claims, the affirmed ________

    court's judgment is vacated with instructions to remand the vacated _______

    remaining claims to state court.






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