Opinion
89-CV-1848 (ILG).
May 19, 2003.
MEMORANDUM AND ORDER
This is a civil action brought by the United States pursuant to the Racketeering Influenced and Corrupt Organizations Act ("RICO"). Defendant Nicholas Ferrante moves to modify the terms of a consent decree so ordered by this Court on November 6, 1996. For the reasons stated below, the motion is denied.
BACKGROUND
In 1994, this Court awarded summary judgment to the plaintiff against Ferrante, finding him liable for RICO violations relating to his participation in the Long Island carting industry, and entered an order enjoining Ferrante from participating in that industry and requiring him to disgorge the proceeds of unlawful activities and any interest in the Long Island carting industry. See United States v. Private Sanitation Industry Assoc. of Nassau/Suffolk Inc., 899 F. Supp. 974 (E.D.N.Y. 1994), aff'd 47 F.3d 1158 (2d Cir. 1995). These unlawful activities included briberies and violations of the Hobbs Act as part of a scheme to dominate an industry "plagued with corruption." Id. at 982-83. In 1996, this Court awarded summary judgment against Ferrante's two companies, Unique Sanitation, Inc. ("Unique") and U-Need-a-Roll-Off Corp. ("U-Need"). United States v. Private Sanitation Industry Assoc. of Nassau/Suffolk Inc., 914 F. Supp. 895 (E.D.N.Y. 1996).
After these judgments, the United States and the Ferrante defendants (which included Ferrante, his son Joseph, Unique and U-Need) entered into a global settlement resolving the remaining claims and issues. A stipulation of settlement memorialized the terms as to Joseph Ferrante, Unique and U-Need. As to Ferrante himself, a Consent Decree modifying the prior injunction was reached. The Court so ordered the stipulation of settlement and the Consent Decree on November 6, 1996. Familiarity with these prior opinions and orders is presumed.
In the stipulation of settlement, Unique and U-Need agreed to supervision by a court-appointed monitor for a term of five years. That term ended in 2001.
Pursuant to paragraph 1 of the Consent Decree, Ferrante agreed to continue to be bound by the terms of the previously issued injunction but was allowed to resume a limited role in the operations of Unique and U-Need. Specifically, Ferrante was permitted to "to visit the premises of [the companies], to review the books and records of these companies, to meet with employees of these companies, and to discuss with the employees the operations of these companies." (Consent Decree. ¶ 1(a).) Ferrante agreed otherwise not "to become involved in any aspect of the solid waste industry not specifically set forth in paragraph (a), above." (Id., ¶ 1(b).) Additionally, Ferrante agreed not to have any communications with customers of Unique or U-Need (id., ¶ 1(c)(iii)), not to solicit any business concerning solid waste services or the solid waste industry (id., ¶ (c)(iv)), not to communicate with any governmental entity regarding the solid waste industry (id., ¶ 1(c)(viii)), and not to be employed by or represent in any manner any carting company or solid waste industry business except for the limited exception described in paragraph 1(a) with regard to Unique and U-Need. (Id., ¶ 1(c)(ix).)
In his motion seeking to modify the Consent Decree, Ferrante seeks to "resume limited activities in Unique and U-Need, be recognized as an officer of those corporations, . . . be able to speak with customer[s] and potential customers to develop new business" and "take a direct role in upgrading the service provided, selecting new equipment and otherwise monitoring the business practices of the companies." (Ferrante Aff., ¶¶ 20-21.) Ferrante notes that many of the features of the Long Island carting industry have changed since 1994. For example, Ferrante states that the trade association no longer exists, that many of the entities involved in the trade association have ceased operating or changed hands, and that the degree of competition today means that the "situation" that existed prior to judgment no longer exists and could not develop again. (Id., ¶¶ 13-15.)
Elaine Wood, a representative from the court-appointed compliance officer that monitored Unique and U-Need for five years, reports that although competition has improved since 1996, the potential for collusion and intimidation still exists and competition is not always "robust." (Wood Dec. 19; see id., ¶ 6-9.) Since the active monitoring of Unique and U-Need ended, prices for Unique customers have gradually increased despite a decline and then-stabilization of prices more generally in the Long Island carting market, and Unique customers in 2002 "were reporting a price increase of almost $2 per cubic yard over the prices" charged in 2000. (Id. at ¶ 9.) Ms. Wood reports that Unique and U-Need customers interviewed during the last three years generally report that they have not been solicited by other carting companies, recall the prior history of intimidation and threats that existed when Ferrante controlled the companies, and some customers reported that Unique has used aggressive sales tactics. (Id., ¶¶ 10-11.) Ms. Wood expressed her belief that permitting Ferrante to resume a more significant role at Unique or U-Need "could be interpreted as a sign that past practices have returned to the carting industry on Long Island." (Id., ¶ 11.)
One customer reported that he had received solicitations from competitors with lower bids, but "believed he would have `problems' switching" to a competitor. (Wood Dec. at ¶ 10.).
In reply to the Wood Declaration, Ferrante's son and co-defendant Joseph Ferrante, the President of Unique and Vice-President of U-Need, submits a declaration. According to Joseph Ferrante. Unique and U-Need's customers contract for periods of four to five years, and these contracts provide for price increases under certain circumstances, but otherwise no "across the board" rate increases of the magnitude of $2 per cubic yard have occurred. (Joseph Ferrante Dec., at 1-2.) He notes that his companies have not been "inundated with complaints from our customers," (id. at 2), that about ten new companies have been organized in the last two years, (id.), and that since the Consent Decree and stipulation of settlement were implemented, hundreds of contracts have expired but the majority of customers renewed their agreements with Unique and U-Need. (Id. at 3.) Finally, he notes that only five of the fifteen other companies that were members of the trade association remain in business. (Id.)
ANALYSIS
Although Ferrante does not specifically state the basis for his motion, his attention to changed circumstances indicates that this motion is brought pursuant to Federal Rule of Civil Procedure 60(b), by which this Court "may relieve a party or a party's legal representative from a final judgment, order or proceeding for the following reasons: . . . (5) . . . it is no longer equitable that the judgment should have prospective application." "A party seeking modification of a consent decree bears the burden of establishing that a significant change in circumstances warrants revision of the consent decree." Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367, 383 (1992). Although Rufo concerned the vindication of constitutional rights, the same standard is applied in this Circuit to consent decrees concerning statutory and other rights. See United States v. Eastman Kodak Co., 63 F.3d 95 (2d Cir. 1995) (applying Rufo to motion to terminate consent decree entered in 1921 and 1954 due to purported antitrust violations).
Rufo described three scenarios where changes in the factual circumstances support modification of a consent decree: (i) when changed factual conditions make compliance with the decree substantially more onerous; (ii) when the relief provided in the decree proves to be unworkable because of unforeseen obstacles; or (iii) when enforcement of the decree would be detrimental to the public interest. See Rufo, 502 U.S. at 384. Even if Ferrante can meet this burden, the Court must consider whether the proposed modification is suitably tailored to the changed circumstances. See id. at 383.
Plaintiff is surely correct that Ferrante's motion goes to the very heart of the judgment against him, since it enjoined him permanently from engaging in activities in the solid waste industry. Moreover, the changes which Ferrante states have occurred, if true, were intended by the consent decree and thus usually would not be a basis to support modification of the Consent Decree. See Rufo, 502 U.S. at 385 ("Ordinarily . . . modification should not be granted where a party relies on events that actually were anticipated at the time [the order was entered].") When the United States and Ferrante signed the Consent Decree, they did not intend it to operate only until a competitive market was restored in the carting and solid waste industry on Long Island.
The changes described by Ferrante do not make his compliance with the Consent Decree any more onerous, nor have any unforeseen obstacles appeared. Similarly, the public interest suffers no impairment due to Ferrante's continued exclusion from the industry, and indeed there is at least a moderate risk that his return would alter negatively perceptions of the marketplace. Accordingly, Ferrante has failed to meet his burden.
CONCLUSION
The motion to modify the Consent Decree is denied.