court noted that, in addition to other methods, "the threat of continuity is sufficiently established . . . where it is shown that the predicates are a regular way of . . . conducting or participating in an ongoing and legitimate RICO 'enterprise.'" Id. at 242-43.
In this case, while the alleged predicates occurred over a very short period, the court finds that plaintiff may well be able to establish at trial that extortionate conduct is a regular way of conducting the Local 30 enterprise and, thus, that a threat of continuing racketeering activity exists.
Such a possibility is sufficient for a plaintiff to survive a motion to dismiss on grounds of failure to establish a "pattern of racketeering activity." See H.J., 492 U.S. at 250 (reversing 12(b)(6) dismissal on analogous grounds). Accordingly, the court concludes that the RICO claim brought against defendant Lowry survives defendants' motion to dismiss.
B. LMRDA Claims
Plaintiff contends that the same conduct attributed to defendants in regard to his RICO claim also violated the LMRDA, under both 29 U.S.C. § 411 and 29 U.S.C. § 501.
Defendants move to dismiss both of these claims on grounds of preemption or, alternatively, for failure to state a claim.
Defendants argue that plaintiff's LMRDA claims are preempted by the NLRA and by internal union remedies which must be exhausted prior to the filing of a claim in district court.
a. NLRA Preemption
For the same reasons as set forth in the preceding sections concerning plaintiff's RICO claims, defendants contend that the alleged misconduct constitutes arguable or actual violations of the NLRA and is thus subject to the exclusive jurisdiction of the NLRB. This argument is meritless, as was noted above in the discussion on RICO; the holdings in Hardeman and Sullivan dictate that actions arising over alleged LMRDA violations are not preempted by the NLRA even where the challenged conduct may be construed as an unfair labor practice. Hardeman, 401 U.S. at 241; Sullivan, 1992 U.S. Dist. LEXIS 16168, at *22. Accordingly, the alleged misconduct is not preempted by the NLRA.
b. Exhaustion of Remedies
Defendants also argue that plaintiff's LMRDA claims must be dismissed on the grounds that plaintiff failed to exhaust internal union remedies. Different requirements apply to Sections 411 and 501; these are respectively addressed below.
i. 29 U.S.C. § 411
Section 411 contains a specific exhaustion requirement in subsection 411(a)(4), which provides in relevant part:
No labor organization shall limit the right of any member thereof to institute an action in any court, or in a proceeding before any administrative agency, . . . provided, that any such member may be required to exhaust reasonable hearing procedures (but not to exceed a four-month lapse of time) within such organization, before instituting legal or administrative proceedings against such organizations or any officer thereof . . . .
Exhaustion of internal union remedies is not an absolute requirement under Section 411, but rather is subject to judicial discretion. Mallick v. International Brotherhood of Electrical Workers, 644 F.2d 228 (3d Cir. 1981); Semancik v. United Mine Workers, 466 F.2d 144 (3d Cir. 1972). Failure to exhaust internal union remedies is thus not a jurisdictional bar; rather, the exhaustion issue is an affirmative defense in which the defendant union bears the burden of persuasion. Johnson v. General Motors, 641 F.2d 1075, 1079 (2d Cir. 1981); accord Doty v. Sewall, 908 F.2d 1053, 1061 (1st Cir. 1990) (holding that union bears burden of proving both the existence of an adequate intra-union remedy and plaintiff's failure to exhaust it).
The Semancik court set forth three scenarios in which exhaustion may be waived: (1) where plaintiff would otherwise suffer irreparable harm, (2) where an inadequate or illusory appeals structure, or a structure dominated by individuals opposed to plaintiff, would render pursuit of internal remedies futile, and (3) where a union's consistent adherence to a position contrary to that advocated by plaintiff would result in similar futility. Semancik, 466 F.2d at 150-51.
In this case, plaintiff contends that the history of violence and intimidation in Local 30, in conjunction with the specific acts alleged to have been committed against plaintiff by Local 30 officials, make pursuit of internal union remedies futile. Additionally, plaintiff suggests that any internal remedies would not provide him with adequate relief for his alleged economic losses. Both of these contentions, if accurate, would under Semancik except plaintiff from the Section 411 exhaustion requirement.
Defendant argues that plaintiff has failed to adequately prove the applicability of the Semancik "futility" and "inadequate remedy" exceptions. This argument is unpersuasive for two reasons. First, while plaintiff does not address the inadequacy of internal remedies in his complaint, he does, in this court's view, include sufficient pleadings to make a prima facie case for application of the "futility" exception. Second, as noted above, it is defendants' burden to prove the applicability of the exhaustion requirement. The issue is thus a factual one--whether or not the atmosphere and remedial procedures of Local 30 warrant enforcement of the exhaustion requirement or, alternatively, exception from it.
Accordingly, the court rejects defendants' exhaustion argument in regard to plaintiff's Section 411 claim.
ii. 29 U.S.C. § 501
Section 501 does not have explicit exhaustion requirements as exist under Section 411, but does contain a procedural hurdle akin to the "demand" requirement imposed on shareholder-plaintiffs in corporate derivative actions. Sabolsky v. Budzanoski, 457 F.2d 1245, 1252 (3d Cir. 1972) (citation omitted). Under Section 501(b), before suing a union officer in court, an aggrieved union member must first request that the union "sue or recover damages or secure an accounting or other appropriate relief"; only after the "labor organization or its governing board or officers refuse or fail" to take action may a member initiate a suit on his own behalf. 29 U.S.C. 501(b).
In addition to the "request" requirement under 501(b), there is a "good cause " requirement imposed upon the union member. The statute provides in relevant part: "No such proceeding shall be brought except upon leave of the court obtained upon verified application and for good cause shown . . . ." Id. Thus while Section 501 does not mandate pursuit of internal union remedies, the "request" and "good cause" elements of the statute constitute two procedural requirements that must be satisfied in order to maintain an action in district court. See Cowger v. Rohrbach, 868 F.2d 1064, 1066-68 (9th Cir. 1989) (analyzing both requirements).
Defendants contend that plaintiff has failed to satisfy either of these requirements. In regard to the "request" requirement, defendant argues that plaintiff made no such request and that failure to do so is fatal to his claim. In support of this contention, defendants cite to a Ninth Circuit case, Flaherty v. Warehousemen, Garage & Service Station Employees' Local Union No. 334, 574 F.2d 484 (1978), which indeed held that failure to allege such a request requires that the court deny leave to file the Section 501 claim. Id. at 487. Furthermore, the Flaherty court made explicit--as the Second Circuit had already done--that "an allegation of the futility of such a request will not suffice." Id. (quoting Coleman v. Brotherhood of Railway & Steamship Clerks, 340 F.2d 206, 208 (2d Cir. 1965)).
The Third Circuit, however, has refrained from adopting the strict reading of Section 501 that is adhered to by the Second and Ninth Circuits. In Sabolsky, 457 F.2d 1245, the Third Circuit set the stage for a less restrictive interpretation of the Section 501 "request" requirement. The Sabolsky court analogized the "request" rule to the exhaustion of internal remedies rule under the LMRDA, noting that the latter is not mandatory under the statute. Id. at 1252. The court suggested that circumstances may exist where "strict use of any exhaustion requirement would not be warranted." Id. at 1253. Noting that "a request to sue would have been an exercise in futility" in the matter before it, Id., the Sabolsky court implicitly adopted a rule rejected in Flaherty and Coleman --that futility may serve as an exception to the "request" requirement.
Subsequent to Sabolsky, a district court in this circuit interpreted the Sabolsky holding as firmly establishing that the "request" element of Section 501(b) is not mandatory. In Pawlak v. Greenawalt, 464 F. Supp. 1265 (M.D. Pa. 1979), the court observed:
There is no absolute requirement in this Circuit that a Plaintiff request his union to take court action prior to the institution of suit. In Sabolsky. . ., the Court stated that the requirement of requesting the union to take action prior to the institution of suit was similar to the requirement contained in other sections of federal labor statutes that a union member exhaust internal union remedies prior to filing suit and that it was not mandatory in all cases. In Sabolsky, the Court reviewed the actions of the Plaintiff prior to his filing of the action and stated there was no indication that the suit was filed as an attempt deliberately to harass the union, which underlies the Congressional requirement that a request to take some action be made before suit is filed. The Court also recognized that in certain situations a request to sue may be futile and that in such a case an action need not be dismissed because of the failure to make such a request.