29 In sum, far from being unusually harsh or unfair to plaintiffs with pending cases, the effective date provision of H.R.1046 goes as far as reason allows in protecting plaintiffs with pending suits. Conclusion H.R.1046 will help correct the most egregious abuses of the RICO statute. It is a carefully-crafted compromise, the result of several years of hearings, study and work by members of both the Senate and House Judiciary Committees. Like all compromises it may not go as far as some would like, but its supporters believe this legislation represents a practical and workable solution to a significant and growing problem. The Coalition urges the Subcommittee to give it your unanimous endorsement again, and to do so in a manner that will permit RICO finally to be reformed in the 101st Congress. Mr. HUGHES. Mr. DuBester. STATEMENT OF ERNEST DuBESTER, LEGISLATIVE REPRESENTATIVE, AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS Mr. DUBESTER. Thank you, Mr. Chairman. On behalf of the AFL-CIO, I appreciate this opportunity to present its views in support of H.R. 1046. We have been part of the arduous process over a period of years that Mr. Lacovara referred to, in which we've been seeking to come up with a legislative vehicle that would curb the rampant abuse of the private civil RICO action, and we believe that this bill would take a significant and necessary step toward accomplishing that end; namely, by narrowing the class of private civil RICO actions in which treble damages, costs and attorneys' fees may be recovered by a plaintiff. So while we've maintained that other reforms of the private civil RICO action are needed, we believe that H.R. 1046 is a sensible first step in the proper direction, and we urge this subcommittee to give it favorable consideration. We also want to point out at the outset that we think that H.R. 1046 takes the proper approach of addressing separately the peculiar problems proposed by private civil RICO actions as distinct from civil RICO actions brought by Governmental authorities or those involving criminal prosecutions. We've had, perhaps, the unique opportunity to observe how the private civil RICO action actually works. Unions affiliated with our federation have been both plaintiffs and defendants in suits in which employers as well as unions have added the private civil RICO action to their arsenal of weapons available for their use in the context of labor disputes. One fairly longstanding labor-management dispute that is, in our view, improperly turned into a civil RICO action, is the suit brought by Texas Air Corp. against two of our affiliated airline unions, which really stemmed out of the long-standing labor-management dispute with Eastern Airlines. However one would view the merits of the labor-management issues at stake in that case, Mr. Chairman, I would suggest that it clearly is not designed to get at the core conduct the Congress had in mind when it enacted the RICO statute. So at a time, for example, when we have been struggling to come up with a reasonable solution to the problems that exist in getting that airline back in the air in full operation, instead, the parties are caught up in a complicated legal and factual morass of a RICO suit. And we would suggest that the burden that such a lawsuit imposes on the parties, as well as on the courts, is not offset by any justifiable social benefit. So that experience and other similar experiences, Mr. Chairman, teach us that as we have heard from the courts and recently from the Chief Justice, and as we have all come to learn, that the typical RICO action rarely, if ever, is brought to get at the kind of enterprise criminality or the core conduct that Congress sought to combat when it enacted RICO originally. And, indeed, the private civil RICO action offers plaintiffs the broad ranging, open-ended means of attack, with its potential of devastating monetary and other remedies as a substitute for the more carefully limited State and Federal causes of actions, such as the multitude of Federal labor laws that Congress has enacted and amended over a period going back as much as 60 years, and which are specifically addressed to certain kinds of misconduct that labor-management disputes sometimes engender. So we believe that H.R. 1046 strikes a careful balance; it eliminates the treble damage remedy, and the availability of attorneys' fees, and those categories of private civil RICO actions in which those remedies are most troublesome; however, while retaining them for application through truly extraordinary situations. So we believe that the most desirable response to the present situation would be to repeal the private civil RICO action in its entirety. Failing that, we hope that this committee and the Congress will give H.R. 1046 and its counterpart in the other body a favorable consideration. Thank you. [The prepared statement of Mr. DuBester follows:] 89-26 STATEMENT BY ERNEST DUBESTER, LEGISLATIVE REPRESENTATIVE, AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS, BEFORE THE SUBCOMMITTEE ON CRIME OF THE HOUSE JUDICIARY COMMITTEE ON H.R. 1046 A BILL TO AMEND THE CIVIL PROVISIONS OF THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT (RICO) June 15, 1989 and Congress of The American Federation of Labor This bill, in our judgment, represents a significant and necessary step At the outset, we wish to emphasize that the bill quite properly in our opinion addresses separately the peculiar problems posed by private civil RICO actions, leaving to another day the very different issues respecting civil RICO actions brought by governmental authorities and those respecting criminal RICO prosecutions. RICO's substantive provisions were fashioned in the broadest terms to provide federal law enforcement authorities a means through the criminal laws to reach organized crime and its assets. The net was cast as wide as possible, with the safeguard against abuse being the responsible use of prosecutorial discretion. That safeguard is not available in the context of private civil litigation. Whatever the wisdom of placing such broad power in the hands of governmental authorities, experience has shown that placing the same power in the hands of private parties whose objective is to further their own enforcement, produces results that are both destructive to innocent parties and contrary to the goals RICO was intended to accomplish. 2 The AFL-CIO has had perhaps a unique opportunity to observe how the private civil RICO action actually works. Unions affiliated with the AFL-CIO have been both plaintiffs and defendants in such suits, as employers and unions have added the private RICO action to the arsenal of weapons available for use in the context of labor disputes. Perhaps the paradigm example of this sort of adventitious use of the private civil RICO action is the Texas Air Corporation lawsuit against the Air Line Pilots Association and the International Association of Machinists, growing out of the long-running labor dispute at Eastern Air Lines. The experience to date teaches the following lessons. Congress' motivating objective in enacting RICO was to end the infiltration of legitimate institutions by organized crime. Private RICO actions rarely, if ever, are brought to further that objective. The typical private civil RICO action is between parties to ordinary commercial disputes and labor disputes in which the parties have no relation to organized crime. In that setting, the private civil RICO action offers a plaintiff a broadranging, open-ended means of attack, with the potential of devastating monetary and other remedies, as a substitute for the more carefully limited state and federal causes of action specifically addressed to the kinds of misconduct that such disputes sometimes engender. As Justice Marshall put it in his dissent in Sedima. S.P.R.L. v. Imrex Co., 473 U.S. 479, 506 (1985): Only 9% of all civil RICO cases have Indeed, in Sedima, though they disagreed on questions of statutory interpretation, all nine justices agreed that, in the words of the Court majority, "in its private civil version, RICO is evolving into something quite different from the original conception of its enactors." 473 U.S. at 500. As Justice Marshall added in dissent, "[t]he central purpose that Congress sought to promote through civil RICO is now a mere footnote," id. at 506; and as Justice Powell, also in dissent, put it, "RICO has been interpreted so broadly |