Camelio v. American ( 1998 )

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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