Judge throws out racketeering allegations by union members

A federal judge has thrown out allegations by labor activists in Los Angeles that their local and international union engaged in racketeering and corruption that sapped a pension fund and other funds designed to benefit members.

U.S. District Judge Dean D. Pregerson ruled Wednesday that a dissident group of members of the International Union of Operating Engineers, Local 501 did not have standing to bring allegations under the Racketeer Influenced and Corrupt Organizations Act.

Pregerson said that any losses to the pension fund, a fund to train workers and other special funds would have been suffered by Local 501 and funds themselves, not directly by the union members who sued. That gave only the local and its trust funds legal standing to sue, Pregerson ruled.

The judge also dismissed claims not tied to the RICO statute. One said the union improperly blocked opposition candidates from participating in an election for union officers. The other claim alleged that union officials had failed in their duty to protect retirement funds. Pregerson essentially found that the allegations on those points were too vague, but he gave the plaintiffs the opportunity to amend those claims, thus keeping a portion of the lawsuit alive.

Local 501 represents so-called stationary engineers, who oversee heating and cooling and other systems at hotels, office buildings and other structures. The members who filed suit alleged that union bosses had structured many transactions to take care of insiders at the expense of rank-and-file workers.

“We always took the position that the claim had no merit and was frivolous,” said Stacey Leyton, one of the attorneys who represented the union and its officers. “The judge’s ruling means the RICO claims the plaintiffs asserted...are gone for good.”

Leyton predicted that the remainder of the suit — related to the union election and the protection of pension funds — would be thrown out once Pregerson sees that there is no substance to an amended complaint.

Attorneys representing former Local 501 officer Finn Pette and 15 others said the plaintiffs would forge ahead, perhaps by asking for reconsideration of Pregerson’s ruling but also by amending the claims the judge did not reject outright.

Attorney Scott Leviant denied that the RICO claims were the heart of the case against the union, saying “the case still has a lot of viability.”

“A major component of the case is about transactions by the union that hurt funds that benefit members,” Leviant said. “There is still a case to be made that can help the workers.”

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james.rainey@latimes.com