LABOR LAW REFORM
NLPC Petitions DOL for Rulemaking to Combat Corruption
The Nat'l Legal & Policy Ctr., a union corruption watchdog, filed
a petition with the Dep't of Labor May
20 requesting that DOL initiate a rulemaking to amend and expand its reporting
and disclosure regulations under the Labor-Management
Reporting & Disclosure Act of 1959. The 40-page legal document
makes a strong case that DOL's existing regulations don't do enough to
protect the rights of members and the integrity of union treasuries. As
recently as 2000, for instance, some 34% of unions failed to file or filed
the statutorily required annual financial reports late. Also, NLPC found
union corruption in 40 of the 68 AFL-CIO affiliated unions (59%)
and in 41 of the 50 States and D.C. (80%) within the last two years. Equally
disturbing, NLPC found that some $33.4 million in restitution has
been paid or ordered to be paid as the result of union embezzlements and
closely related crimes over the last ten years in which data was available.
NLPC's petition proposed five reforms to enhance union transparency, increase information available to union members, and better inform union members of their rights. First, it proposed that DOL make more regular use of its statutory right to file civil suits to enjoin violations of LMRDA's reporting requirements. Second, it recommended revising the existing annual report forms (i.e., LM-2s) to include functional reporting and itemized schedules. Third, it recommended that DOL require unions to meet accounting standards in their preparation of their reports. Fourth, the petition suggested efficient procedures for DOL's much anticipated Internet disclosure system. Finally, it proposed that DOL required unions to notify their members when they file their annual reports and how to access the reports.
"These modest reforms are long overdue given the wave of union corruption in America today," said NLPC Chairman Ken Boehm. "As the petition demonstrates, each of these five reforms is well within the Department's grant of authority under the LMRDA. It's a shame the past Labor Deparments have not made full use of this authority from Congress to better protect all who suffer the consequences of union corruption." NLPC's petition is available at http://www.nlpc.org/olap/dol/020520p.htm.
ULLICO / CARPENTERS (UBC) / COMMUNICATIONS WORKERS
(CWA)
Watchdog Calls on Tainted Bosses to Resign
Union corruption watchdog, the Nat'l Legal & Policy Ctr., has demanded
the resignation of several Ullico, Inc., board
members allegedly involved in the growing insider trading scandal. NLPC
sent a open letter May 16 to
three board members of the union-dominated insurance firm: Robert
Georgine, Ullico chairman, Morton Bahr, Communications Workers of Am. president,
and Douglas McCarron, United Bhd. of Carpenters president. Each potentially
made huge profits at the expense of union members, whose pensions invested
in Ullico stock.
NLPC's letter was published as ad in Roll Call magazine on Capitol Hill and is at: http://www.nlpc.org/olap/aflcio/rollcallfinal.pdf. It began: "AFL-CIO says 'No more Enrons.' We could not agree more!" NLPC Chairman Ken Boehm, author of the letter, put the pressure on the board members: "Your first responsibility is to union members, not your personal bank accounts. Yet, according to recent news reports, you and other union presidents on Ullico's board allegedly enriched yourselves--at workers' expense--with secret, insider stock deals. You and other board members have turned down invitations to testify before Congress to explain what you knew about this growing scandal, and are now being investigated by a federal grand jury and the Department of Labor."
Boehm added "To set the record straight on the Ullico scandal, board members should explain why Arthur Coia, a former laborers union president and convicted felon, Jake West, former head of the ironworkers and recently indicted on federal embezzlement charges, and Marty Maddaloni, head of the plumbers union and under investigation for pension irregularities--were all part of the Ullico board who approved the stock scheme. They--like you--cashed in on the insider Ullico stock deal with the excuse that lawyers gave the secret scheme their ok. Wasn't that the Enron defense?"
The letter concluded "Union leaders on Ullico's board must act immediately to set the record straight and restore the damaged integrity of union leaders by; 1) Returning to Ullico the millions of dollars in insider stock profits by union leaders. 2) Testifying before Congress about your involvement in the stock scheme that allowed Ullico directors to receive a disproportionate share of Ullico profits while shortchanging rank and file union members. 3) Offering a full accounting of all profits you and other Ullico directors received as part of the special stock deal you voted for yourselves, but did not offer to rank and file owners of Ullico. 4) Explaining the qualifications you and the other Ullico directors have to make judgments about sophisticated investment strategies in the insurance business. 5) Apologizing to union members and retirees. They deserve to hear from union heads--not spokesmen--about the impropriety of the Ullico board's actions. 6) Resigning."
IRON WORKERS (IAIW)
New Info on Guilty Boss; Lied for Daughter; Auditor Linked
As previously reported, Raymond J. Robertson,
ex-general vice president of the Int'l Ass'n of Iron Workers and ex-trustee/director
of a benefit fund linked to the union, pled guilty Apr. 11 to eight felony
counts linked to a series of thefts from the Nat'l Ironworkers & Employers
Apprenticeship Training & Journeyman Upgrading Fund. Specifically,
he confessed to one count of conspiracy to defraud a benefit plan, one
count of aiding and abetting embezzlement from an entity receiving federal
funds, and six counts of embezzlement. He agreed to pay a $30,000 fine
and $103,170 in restitution. Through several different types of schemes,
Robertson stole or helped cover up thefts of more than $100,000 from the
Fund from Apr. 1998 to Apr. 2001.
In Jan. 1999, accountants from the firm of Thomas Havey LLP audited the Fund. At that time, co-conspirator Kerry J. Tresselt, Robertson's daughter, worked as the bookkeeper for the Fund. After receiving a tip from a staffer, an auditor found that payroll checks had been issued to Tresselt's husband even though he had not been working for the Fund. The Thomas Havey partner in charge of the audit allegedly informed Robertson that Tresselt was having bogus payroll checks, which even included overtime, issued in the name of Andrew Tresselt. Reportedly, Tresselt stole some $33,000 via this scheme.
Despite learning in Jan. 1999 that Tresselt had stolen the money, Robertson and the partner allegedly failed to disclose the thefts to other Fund trustees. Also, in Feb. 1999, Robertson and the partner allegedly told the other trustees that the Funds' accounts of the Fund were in good order. Further, until May 2001, Robertson and the Thomas Havey firm allegedly continued to conceal Tresselt's thefts and assure the trustees that the Fund's operations and controls were in excellent order.
In other scheme, Robertson aided and abetted the theft of more than $74,000 that the Fund received in connection with a federal grant from the Dep't of Labor to train workers in Poland. He aided this theft by approving false and fraudulent claims for work submitted by Tresselt and another Fund employee which they did not perform. Finally, Robertson stole some $27,000 by using the Fund's money to pay for personal meals and items for himself and others, including a $1,480 flagpole for the personal residence of Jacob "Jake" West, the ex-IAIW president, in rural southwest Va.
In stealing money from the Fund, Robertson deprived union iron workers of additional training opportunities and, indirectly, stole money from them. The Fund obtains most of its resources through contributions from contractors. Those contributions are based on collective bargaining agreements between iron workers and their employers under which the employers agree to submit an amount of money per hour worked by iron workers. Thus, those contributions reflect dollars earned by the hard work of union iron workers.
Robertson is the seventh union boss or employee to be charged in the federal probe of IAIW. His daughter pled guilty to embezzling $350,000 from the Fund on Nov. 8. There has been no report that Tresselt's husband or anyone at the Thomas Havey firm has been charged in the case. West, is awaiting trial on charges related to a $50,000 union embezzlement and has been linked to the Ullico, Inc. insider trading scandal. [USAO D.D.C. 4/11/02]
LABORERS (LIUNA)
Niagara Local Rocked by Racketeering & Extortion Indictments
At dawn on May 17, federal agents arrested 14 men associated with Laborers'
Int'l Union of N. Am. Local 91 in Niagara Falls, N.Y. Michael
"Butch" Quarcini, Local 91's business manager and long considered one of
the most powerful people in Niagara County labor circles, was among those
arrested. Charges were filed by U.S. Atty. Michael A. Battle accusing
Local 91 bosses of racketeering and "goon squad" tactics to intimidate
contractors, workers, and developers. "These charges should have a positive
effect on the way business is conducted in Niagara County, starting today,"
said FBI agent Peter J. Ahearn. "I hope we can put an end to intimidation
tactics that have suppressed development in Niagara County."
In Aug. 2000, the Buffalo News reported that several the feds were probing labor racketeering at Local 91. It focused on extortion, beatings, and stomping attacks at work sites, a bombing at the home of a worker who had a dispute with Local 91, and a $100,000 vandalism incident. Court papers cite numerous alleged instances of Local 91 president Mark Congi and other bosses making threats against nonunion workers and employers. For instance, vice president Salvatore Bertino allegedly told a contractor: "I'm not from this country. We know how to take care of people like you. The fun doesn't begin until the feds leave."
Amid concern about possible reprisals, none of the witnesses or victims, even the firms they worked for, were mentioned in the 43-page indictment. The suspects were described as "the goon squad, strong arms and thugs." All pled not guilty in appearances before U.S. Magis. Judge Leslie G. Foschio (W.D.N.Y.). All were released without bail, except for Congi, Bertino, and Andrew Shomers, a Local 91 steward. They have been jailed since the indictments pending a May 22 hearing. [Buffalo News 5/17, 5/18, 5/21/02; N.Y. Times 5/18/02] For more details about the schemes, see http://www.nlpc.org/olap/ucu3/05_11_04.htm.
Michigan Boss Admits $32,700 Theft
Edward K. Wiebeck, Sr., ex-business manager
of Laborers' Int'l Union of N. Am. Local 503 in Jackson, Mich., pled guilty
to one count of embezzling $32,790.82 from the local. He was charged on
Apr. 9. [DOL 5/9/02]
PLUMBERS (UA)
New Charges in Minnesota Case; $43,300 Theft
A federal grand jury returned additional felony charges May 21 against
Thomas J. Martin, ex-business manager of United
Ass'n of Plumbers & Pipe Fitters Local 15 in Minneapolis, and Minneapolis
City Council member Joe Biernat (DFL). Each face two added
mail fraud charges in connection with Martin's alleged use of $2,700 in
union funds to pay for plumbing work in 1999 at Biernat's home.
The original indictment, unsealed Apr. 18, charged that Martin paid for Biernat's plumbing work at the same time Biernat and his colleagues were approving Martin's appointment to the city board that certifies plumbers to work in the city. The new indictment also increases the amount of money Martin is charged with stealing to $43,323, taken on six occasions between 1998-2001. Originally, he was charged with a $17,877 embezzlement. The indictment gives no indication of how Martin used the other money he allegedly stole.
Reportedly, Martin and Biernat used the mail to send invoices and checks related to the plumbing work. In addition to mail fraud, the two face charges of extortion, conspiracy, and theft. Biernat also faces charges of making a false statement. Martin allegedly obstructed justice and concealed information from investigators.
Since the indictments were first returned, City Council President Paul Ostrow (DFL) proposed that the licensing boards be eliminated. Disturbingly, Biernat, still in office, insisted on conducting the first hearing on the proposed change in mid-May as chairman of the council's Public Safety & Regulatory Servs. Committee, despite Ostrow's fears that it might appear to be a conflict of interest. Action on the plan was delayed to give unions and businesses time to comment on the proposal. [Star Trib. (Minneapolis) 5/22/02]
QUOTABLE QUOTE / AFL-CIO / HOTEL & RESTAURANT EMPLOYEES
(HERE)
"When Mr. Trumka says 'whatever
it takes' he more than likely means using deceit, deception and violence
to aid the local Culinary [union] as it negotiates with numerous Strip
hotels. Mr. Trumka is experienced at all of the above."
-Douglas E. French, Letter to the Editor, Las Vegas Rev. Journal, May 20, 2002, commenting on AFL-CIO secretary-treasurer Richard L. Trumka's promise to aid Hotel Employees & Restaurant Employees Local 226 (a.k.a. Culinary Local 226) in negotiations with several Las Vegas hotels.
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ADDITIONAL BRIEFS NOT INCLUDED ON THE FAX EDITION OF THIS UNION CORRUPTION UPDATE:
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NATIONAL LABOR RELATIONS BOARD (NLRB) / ELECTIONS &
POLITICS
NLRB Attorney Removed for using Federal Government Resources to
Help Democrat
The federal government's Office of Special Counsel announced May 21
that Nat'l Labor Relations Bd. attorney Bruce Buchanan agreed leave federal
service for violating the Hatch Act. OSC, an independent federal
investigative and prosecutorial agency covering the federal workforce,
filed a petition with the Merit Systems Protection Bd. in Oct. 2001, seeking
Buchanan's disciplinary removal for allegedly engaging in political activity
prohibited by the Hatch Act. The Hatch Act prohibits most government employees
from partisan political activity while on duty or in a government facility.
Buchanan confessed to improperly soliciting political support and financial donations in support of a Democratic Senate candidate while he was on duty during 1997 and 1998 in the NLRB field office in Little Rock, Ark. OSC accused Buchanan of using government equipment in his office and his government title to contact and prepare briefing memoranda for a candidate. OSC further accused Buchanan of using government resources, including the help of a subordinate employee, to prepare campaign contribution solicitation materials aimed at various current and former union officials whose unions regularly were involved in actions before NLRB.
Under the terms of a consent judgment approved by MSPB May 16, Buchanan will be removed from federal employment July 15, and a copy of the removal order will be placed in his permanent employment file. [BNA 5/23/02] The Democratic candidate was not named. Senator Blanche Lincoln (D-Ark.) was elected in 1998 and defeated three other Democratic candidates in the the party's primary: Winston Bryant, Scott Ferguson, and Nate Coulter.
LABORERS (LIUNA)
Editorial Blasts Indicted Buffalo Bosses
The following are key excerpts from the Buffalo News' May 22 editorial,
entitled "Laborers Local 91," that put the recent
racketeering and extortion indictments in the proper perspective:
"[S]omeone has been committing labor violence in Niagara County for years. With these charges, law enforcement has finally served notice that it has to stop. For the sake of that enfeebled county, and all Western New Yorkers, it is important that it does. A 43-page indictment described the charges that led to Friday's arrests of 14 members of Local 91, including its business manager, Michael "Butch" Quarcini, and its president, Mark Congi. It is a damning document, accusing the 14 of crimes ranging from vandalism and beatings to bombings and death threats.
If proved in court, the allegations could go a long way to explaining why Niagara Falls, one of the world's best-known tourist destinations, is an economic backwater. Facing a backdrop of worksite violence and exorbitant labor costs, in addition to governmental incompetence, what developer would bother to build there, especially if it could go somewhere else? The answer is, almost none.
. . . But it's not just costs. According to the indictment, the home of an asbestos-removal worker was bombed twice hours after a union steward, Paul Bellreng, allegedly threatened the worker's life, saying "I'm going to take your head off tonight." In another incident, Congi and four other defendants allegedly threatened to rape one person's family members, including youngsters. That accusation is both chilling and revolting.
Perhaps most startling is that, only months after the federal investigation was publicized in the summer of 2000, the indictment alleges that union members were still at it, threatening and extorting contractors at Niagara Falls Air Base and at Lewiston-Porter Middle School. If they are convicted, these guys will have been proved not just to be criminals, but stupid criminals, at that.
The only unfortunate aspect to these indictments is that they were so long in coming. Matthew J. Murphy III, the Niagara County district attorney, celebrated their announcement, saying 'For 30 years, this corrupt union has held a stranglehold on Niagara County, its construction contracts and its economic development.' If that's true, justice has been a very long time coming. Citizens might reasonably ask why local, state and federal law enforcement agencies were unable to loosen the grip of these criminals as they were choking the life out of an entire community. Still, better late than never." [Buffalo News 5/22/02]
Indicted Local 91 Boss Fired from Government Post
The Niagara County (N.Y.) Legislature voted unanimously May 21 to fire
indicted Laborers' Int'l Union of N. Am. Local 91
official Paul J. Bellreng from his seat on the board of directors of the
county Industrial Development Agency. Bellreng was ousted from the unsalaried
post following a caucus of the Legislature's Democratic majority, the same
group that installed him and the rest of the nine-member board in Jan.
2002.
Keeping Bellreng on the board "sends the wrong message," said Legislature Chairman Bradley E. Erck (D). Bellreng is one of 14 Local bosses who were arrested May 17 on federal charges. Erck said he sent Bellreng a registered letter May 20 requesting his resignation, but had not received an answer.
Though Legislator Renae Kimble (D) voted for Bellreng's firing, she said Bellreng should have had the chance to come before the IDA board to explain himself. "Brad is a dictator," Kimble said of Erck. "We have a whole list of current legislators, former legislators who committed indiscretions who were not forced to resign." Erck responded, "If you were in the economic development arena, I don't think we should have the appearance of impropriety. Many members of the Legislature expressed their displeasure."
Kimble, the Legislature's representative on the IDA board, said Bellreng was presented to the caucus by Legislator Dennis F. Virtuoso (D). "I received 10 copies of his resume and presented them to the caucus," Virtuoso said. "It wasn't my personal choice." Virtuoso made the motion to remove Bellreng.
Erck said Bellreng deserved different treatment than Youth Bureau Director Teresa D. Holland, who was allowed to stay in her job after being charged with two misdemeanors accusing her of lying on her county job application by not acknowledging a past misdemeanor conviction. "The failure to check a box is different from the charges read from the (Bellreng) indictment," Erck said. "Maybe if there's more than one standard, that's part of politics."
Bellreng, a Local 91 steward, is charged with racketeering and extortion. He is accused of threatening an asbestos removal worker in April 1997, "I'm going to take your head off tonight." The worker's house was bombed that night. Bellreng also allegedly threatened to kill other workers and their families, according to federal prosecutors. [Buffalo News 5/22/02]
Audit Reveals "Significant Accounting and Bookkeeping Problems" at
Chicago Local
A year after Laborers' Int'l Union of N. Am.
Local 2 came out of trusteeship,
the troubled Chicago-based local was again subjected to discipline by the
int'l union. Matt Paul, an "in-house prosecutor" with LIUNA's Office of
the Gen. Executive Bd. Atty.'s Office, told the Daily Labor Report May
20 that a "supervision agreement" had been imposed on Local 2. Reportedly,
supervision is a form of discipline less restrictive than trusteeship and
is accomplished in "cooperation" with the local's executive board. Paul
said the supervision agreement was reached on May 8.
Local 2 has been the subject of several corruption probes. It was placed under an emergency trusteeship in May 1999 . At that time, "in-house prosecutors" contended the local was under the control of organized crime and had ignored democratic principles. The local's primary officer John Matassa was alleged to be a "made" member of Chicago organized crime and later was barred from LIUNA for life.
Local 2 came out of supervision in Mar. 2001, but ran into problems quickly. The local's first democratically elected business manager Richard Caravetta came under scrutiny for alleged mob ties. On Feb. 19, 2002, he signed a settlement with "in-house prosecutors" and agreed to be barred from elected office and employment by the union for life. No report of any federal prosecution.
Paul said Local 2's current problems were primarily internal. He said an audit by LIUNA revealed significant accounting and bookkeeping problems. No report if the matter has been referred to the Dep't of Labor for a federal investigation of the local.
Paul said the presumptive length of the supervision agreement is 18 months. As a practical matter, however, he said the international union hopes to settle the local's problems in one year so it can hold new elections in 2003. Randy Dalton, an executive of LIUNA's Chicago Dist. Council and Local 2's former trustee, will serve as the local's new "supervisor." [BNA 5/21/02]
LABORERS (LIUNA) / OFFICE & PROFESSIONAL EMPLOYEES
(OPEIU) / PLUMBERS & PIPE FITTERS (UA) / ELECTRICAL WORKERS (IBEW)
Grayson and Ten Other Defendants Settle $110 Million Pension Suit
Dozens of union pension and other benefit funds reached a settlement
May 13 with eleven parties to recover $110 million of losses involving
allegations of pension fraud by the Portland, Or., based Capital
Consultants LLC. Capital Consultants had $927 million under its
management when federal agents seized its assets in Sept. 2000. Funds from
Taft-Hartley plans and other employee benefit plans accounted for a large
share of nearly $500 million in estimated investment losses The demise
of Capital Consultants sparked lawsuits by a number of union trusts, alleging
fraud and seeking to recover some of their losses. The proposed settlement,
yet to be approved by the district court, calls for payments to the trusts
by 11 companies and professional advisers, including legal and accounting
firms.
In addition to the $110 million settlement, the court-appointed receiver has collected $140 million from the operation and sale of Capital Consultants assets. Also, litigation by some union members against their fund trustees resulted in a $16 million settlement in Mar. 2002. In total, plan participants have recovered merely 50% of their losses as the result of these various recovery actions. There are an estimated 500,000 participants in 67 trusts involved in the Capital Consultant litigation.
"This is an unprecedented settlement," Steve English of the Portland law firm of Bullivant Houser Bailey, the lead counsel for the trusts, said in a statement. The resolution of the suits was due in part to the months of mediation led by U.S. Cir. Judge Edward Leavy (9th Cir., Reagan), he said. Legal fees and expenses are expected to be less than 7% of the total recovery, English added.
Most of the settlement money is to be paid by various insurers of the defendants. The settlement amounts are to be paid by the following eleven parties: 1) $40 million from the Wilshire Group and principals, a financial services company that defaulted on $155 million in loans from Capital Consultants. 2) $25 million from Lane Powel Spears Lubersky, Capital Consultants' principal law firm. 3) $17 million from Moss Adams, an accounting firm that served as Capital Consultant's accountant and performed asset valuations of the company's private investments. 4) $12.5 million from Stoel Rives, Wilshire's principal law firm. 5) $8 million from O'Melveny & Myers, an additional law firm used by Capital Consultants. 6) $2.5 million from McCarter & English, a law firm representing a Capital Consultants borrower. 7) $2 million from Weiss Jensen Ellis & Howard, an additional law firm used by Capital Consultants. 8) $1.35 million from C.F. Credit, a California private lender. 9) $1 million from Charles and Joseph Musumeci, owners of CJM Planning of N.J. 10) $500,000 from Barclay Grayson, ex-Capital Consultants president and CEO who recently plead guilty to crimes related to the scandal. 11) $100,000 Bear Stearns, a former lender to Wilshire.
Nevertheless, several of the trusts' claims remain unsettled including claims against Capital Consultants, its owner Jeffrey Grayson, Deloitte Touche, an accounting firm that provided services to Wilshire and Pricewaterhouse Coopers, an accounting firm that provided services to Capital Consultants.
The settlement is subject to an approval hearing June 19 before U.S. Dist. Judge Garr M. King (D. Or., Clinton). The settlement represents a consolidation of 26 lawsuits listed in a May 13 hearing notice by King that summarizes the terms of the settlement. In his hearing notice, King said the settlement is in the best interests of the trusts because it avoids the delay and expense of protracted litigation. Also the settlement allows limited insurance funds to be distributed to investors rather than spent on litigation, he said. King also noted that the settlement prevents the trusts or plan participants from filing future claims against the settling parties. Court documents show that the plaintiffs and the receiver believed that Capital Consultants' professional advisers bore part of the responsibility for the investment losses. However, the settlements contain no admission of wrongdoing by any of the defendants.
Lance Caldwell, an Asst. U.S. Attorney in charge of the Capital Consultants criminal investigation, said he is pleased that "so much money is being recovered for innocent victims" but that it will have little effect on potential new indictments. "The criminal and civil investigations have been largely separate and will continue that way." In addition to Grayson, his son Jeffrey L. Grayson and ex-Laborers boss John D. Abbott have also plead guilty in the case. All have agreed to testify against others who are still under investigation by a federal grand jury in Portland.[BNA 5/16/02; Oregonian 5/14/02]
FOOD & COMMERCIAL WORKERS (UFCW)
Local's Employment Contract with its Organizer Held Inherently Unfair
and One-Sided
U.S. Court of Appeals for the Fourth Circuit held May 10 that United
Food & Commercial Workers Int'l Union Local 400's arbitration agreement
in an employment contract between the local and its organizer was
"unconscionable" and unenforceable because it permitted the local to select
a single arbitrator and to overturn the arbitrator's ruling. "[W]e again
refuse to enforce an agreement so 'utterly lacking in the rudiments of
even-handedness,' " U.S. Cir. Judge William B. Traxler, Jr. (4th Cir.,
Clinton), wrote for the court. "By agreeing to arbitration in lieu of litigation,
the parties agree to 'trade the procedures and opportunity for review of
the courtroom for the simplicity, informality, and expedition of arbitration.'
They do not agree to forgo their right to have their dispute fairly resolved
by an impartial third party."
Daniel C. Murray took a leave of absence from his job as produce clerk at Giant Food, Inc. in 1997 to become a union organizer for Local 400, which is headquartered in Washington, D.C. The local required him to sign an arbitration agreement providing that discrimination claims were subject to binding arbitration, with a single arbitrator to be chosen from a list provided by the local's president. The agreement also stated that the arbitrator had no power to "change or diminish" the president's authority under the local's bylaws.
Murray, who is white, was fired in 1998. He sued in the U.S. Dist. Court for the Dist. of Md. under Title VII of the 1964 Civil Rights Act and the Civil Rights Act of 1866. He claimed that Donald Cash, a union manager who is black, fired him on the basis of his race and retained similarly situated black employees. Local 400 filed a motion to dismiss the discrimination claim and to compel Murray to arbitrate his claim. The local also asked for dismissal of Murray's defamation claim. U.S. Dist. Judge J. Frederick Motz (D. Md., Reagan) granted the local's motions, and the parties proceeded to arbitration. A single arbitrator ruled for the union, and the district court confirmed the award. Murray appealed Motz's dismissal of his claims and its order to compel arbitration.
On appeal, Murray argued that the terms of the arbitration agreement were "grossly unfair and one-sided by placing choice of the arbitrator exclusively in the hands of Local 400 and providing that, in any event, Local 400 can disregard the arbitration result because the arbitrator cannot alter the president's authority." The appeals court attacked the agreement: "In the unlikely event the hand-picked arbitrator rules against Local 400," the agreement, in conjunction with the local's bylaws, could permit the union president to fire the employee anyway. The appeals court also reversed Motz's dismissal of Murray's defamation claim. Under Md. tort law, his claim that a union manager said he was "not a good organizer" was actionable, the court found.
U.S. Cir. Judge Karen J. Williams (4th Cir., G.H.W. Bush) joined in the opinion. U.S. Dist. Judge Malcolm J. Howard (E.D.N.C., Reagan), sitting by designation, concurred in the judgment on defamation, but dissented on the arbitration issue. Paul F. Evelius of Wright, Constable & Skeen in Baltimore represented Murray. Francine K. Weiss of Kalijarvi, Chuzi and Newman in Washington, D.C., represented the local. [BNA 5/13/02]
FOOD & COMMERCIAL WORKERS (UFCW) / UNION DUES
Illinois Court Allows Boss' Self-Serving Interpretation of Bylaws
to Stand
The Second District of the Appellate Court of Illinois ruled May 3
that a temporary special dues assessment levied by United Food & Commercial
Workers Int'l Union Local 881 to pay picketers at nonunion grocery stores
was in compliance with local union's bylaws. The court rejected a challenge
by union members Mitchell Diamond and Amy Weltlich, who maintained that
the bylaws required a majority of the 35,000 local members to approve the
assessment. Instead, the court held that Local 881 president Ronald E.
Powell's self-serving "interpretation" of the rules as requiring only a
majority of those members who actually voted, was reasonable, and consequently,
decisive.
The local, based in Westchester, Ill., began the "LEAD campaign" in 1991 to picket nonunion grocery stores in Ill. and N. Ind. The local's executive board approved a $155.88 assessment over 18 months on its members to finance the campaign, and submitted the matter to a vote. Notice of the vote was sent out to members and publicized in the local's newsletter. Votes were held at 21 meetings across the local's geographical operation area. Of the 35,000 local members, only 2,035 attended the meetings. The assessment was approved by a vote of 1,169 to 818.
The local bylaws allowed for the levy of special dues assessments "by the Local Union by a majority vote by secret ballot of the members." They provided, more generally, that unless otherwise provided for in the bylaws, "all matters calling for a vote shall be determined by a majority of the active members present and voting on the question." The bylaws also gave the local's president the authority "to interpret the bylaws and rules of the Local Union." Powell testified at trial that he interpreted the bylaws to require only that a majority of those voting approve an assessment, and that this interpretation was consistent with both the UFCW constitution and federal law.
A labor organization's constitution and bylaws constitute a contract between that organization and its members, Justice R. Peter Grometer wrote for the court, and the court upheld the "contract" because the interpretation was not "arbitrary" or "unreasonable." Justices John J. Bowman and Frederick J. Kapala concur in the opinion. Paul M. Weltlich of Lawrence, Kamin, Saunders & Uhlenhop L.L.C., Chicago, represented the Diamond and Weltlich. Jairus M. Gilden, of Karmel & Gilden, Chicago, represented the local. [BNA 5/13/02]
GOVERNMENT EMPLOYEES (AFSCME)
Amid Lingering Corruption Allegations, DC37's Benefits Fund to be
Audited
The new bosses of the scandal-scared Am. Fed'n of State, County &
Mun. Employees Dist. Council 37 in N.Y.C.
said May 17 that they had ordered a thorough audit of the union's benefits
fund, which will receive $206 million from the city this year. Lillian
Roberts, the district council's newly elected executive director, said
the union wanted an audit because it was time for a fresh review of the
fund. Roberts, who took over in Feb. 2002, ordered the audit three weeks
after the fund's longtime director stepped down. The benefits fund helps
the union's 125,000 members pay for prescriptions, optical care, dental
visits, and legal help.
Mark Rosenthal, DC37's treasurer, said: "We want to know that everything's being done correctly and if anything needs to be changed. If the audit shows we need to do something different, we'll do it." Council officials said they had not yet selected an auditor. In Apr., Roslyn Yasser resigned after running the fund since 1978. Roberts replaced her with Rosaria Esperon, who was a DC37 attorney in the late 1980's and then worked for N.Y.C. Comptrollers Elizabeth Holtzman and Alan G. Hevesi over the last eleven years.
For three years the benefits fund has been defending itself against a suit in which two ex-fund officials claim widespread corruption. The two officials accused the fund of illegally directing money toward the union's political activities and of fraudulently obtaining overpayments from the city by inflating the union's membership figures.
DC37 has repeatedly asserted that the allegations are baseless. Yasser reportedly stepped down because she recognized that Roberts might want to install her own fund director. But two unidentified DC37 officials said that Yasser was pushed out.
Rosenthal called for a full audit in 1999 when he led a dissident group called the Committee for Real Change, which repeatedly criticized the fund for not having a bidding process when it awarded its prescription drug contract to Nat'l Prescription Admin. Inc. The benefits fund spends about $100 million a year on prescription drugs. After the dissidents complained, bids were sought for the contract and another company bid $7.5 million less than NPA was charging. NPA was allowed to continue as the prescription manager when it agreed to charge $7.5 million less. [N.Y. Times 5/18/02]
TEAMSTERS (IBT)
Troubled Boston Local's School Ordered to Vacate Rent-Free Lot
The Mass. Port Auth. Bd. has ordered Int'l
Bhd. of Teamsters Local 25 to vacate a prime waterfront lot in East
Boston they use rent free for a profitable
truck driver training school, an arrangement federal investigators
have eyed in connection with their racketeering probe of Local 25's indicted-president
George W. Cashman. In a letter sent to union
bosses on May 17, MPAB Chief Development Officer Lowell L. Richards III
said the development of Pier One in Eastie is expected to begin in earnest
next year and the developers want all occupants off the property. "I am
notifying you that Local 25 must move the Driving School and vacate Pier
One and its backlands by Dec. 31, 2002, approximately eight months from
now," Richards wrote to officials at the Charlestown-based union.
In 2001, federal investigators reportedly subpoenaed records regarding the rent-free sweetheart deal with MPAB. Cashman was a member of the MPAB board of directors until his indictment in Jan. 2002 on 179 counts of fraud and embezzling. Local 25 has been using the property to operate a truck-driving school, where union instructors trained MPAB workers and potential Local 25 members. MPAB claimed the vacate order was due to the upcoming development and unrelated to either the rent-free deal or Cashman's departure from the board.
According to reports in the Boston Herald, drivers from other non-MPAB employers, including utilities, regularly pay for instruction at the school even though the Local 25 is not certified, as required by the Registry of Motor Vehicles if they train drivers from outside their local. The school had been run by Sean O'Brien, a ex-member of Local 25's "movie crew" that is a focus of the racketeering probe. O'Brien was recently named a business agent for Local 25. O'Brien is the son of Cashman confidant William O'Brien, a movie crew transportation coordinator whose Medford home was raided by investigators in 2001. Allegedly, in the raid confiscated more than $50,000 in cash stuffed in envelopes. [Boston Herald 5/17/02]
MARINE ENGINEERS (MEBA)
Ex-U.S. Attorney Withdraws, Magistrate Recommends Ouster for Indicted
Boss' Other Attorney
On May 1, under heavy pressure from the Dep't of Justice, ex-U.S.
Atty. Thomas E. Scott has finally quit his potion of a defense attorney
for his "old friend", indicted union boss Walter
J. "Buster" Browne. Browne pled not guilty Nov. 3 to a 40-page federal
indictment, brought by Scott's former U.S. Atty.'s Office, accusing Browne
and his sister, Patricia B. Devaney, of running a racketeering scheme that
milked more than $400,000 from his union and four companies. Browne is
president of the Marine Eng'rs' Beneficial Ass'n Dist. 1 (a.k.a., Nat'l
Fed'n of Public & Private Employees) headquartered in Fort Lauderdale,
Fla.
Then on May 7, U.S. Magis. Judge Linnea R. Johnson (S.D. Fla.), who
previously rebuffed DOJ's efforts to throw Scott and co-counsel Steven
E. Chaykin off the case, ruled that Chaykin, should be barred from representing
Browne because of an irreconcilable conflict of interest. "The public perceptions
of fairness of the trial; the need to ensure that criminal trials are conducted
within ethical standards; and the trial court's need to ensure that the
trial remains free from future attacks based upon these issues weigh more
heavily on balance," Johnson wrote. "That is, the likelihood
of public suspicion outweighs the social interest which will be served
by a lawyer's continued participation in this case."
Johnson's report is in the form of a recommendation to U.S. Dist. Judge Daniel T.K. Hurley (S.D. Fla., Clinton), and won't be final unless he accepts it. Browne intends to ask Hurley to reject the magistrate's recommendation concerning Chaykin."It's not like going to a grocery store and getting this or that kind of soup. If I can't have [Chaykin], I'll have to start all over," complained Browne.
In Mar. 2002, DOJ asked the court to bar Scott and Chaykin from representing Browne because their firms also represent star government witnesses against Browne. Scott, who was U.S. Atty. for the S. Dist. of Fla. from Aug. 1997 until May 2000, is a partner at Cole Scott & Kissane. Chaykin is a partner in the Miami office of Zuckerman Spaeder. The trial of Browne had been scheduled for the week of May 6 but was delayed by the fight over who will represent him.
Scott was Browne's attorney in 1993 when a federal judge acquitted the politically influential boss of federal mail fraud charges. He again represented Browne in 1996 when Browne pled guilty in federal court in Washington, D.C., to a reduced charge of misdemeanor mail tampering in an alleged scheme to rig a 1988 union vote. After Scott became U.S. Atty., he was recused from any involvement in DOJ's criminal case against Browne.
After Scott and Chaykin informed the court they were taking over Browne's defense, DOJ moved to bar Scott from the case. DOJ trial attorney Julia J. Stiller argued that Scott's recusal during his tenure as U.S. Atty. was not complete, and that allowing him to represent Browne would violate a federal law aimed at dispelling the public perception of a revolving door between public and private service. But Johnson allowed Scott to stay on the case. Later, Stiller renewed the government's efforts to disqualify Scott and Chaykin after discovering their law firms represented key witnesses against Browne.
One basis for DOJ's was that Scott's law partner, Richard Cole, represents the Dist. 1's accountants through the union's insurance company. Those unidentified accountants are with the firm Poole Goldstein. The alleged conflict involving Scott and his law firm became moot with Scott's May 1 withdrawal."This motion to withdraw is made in order to avoid any appearance of impropriety, to eliminate the expenditure of additional judicial resources on this matter and to allow Mr. Browne and his remaining co-counsel [Chaykin] to devote their resources to preparing his defense, rather than continuing to have their attention be diverted by this collateral matter," Scott's motion said.
DOJ asked for Chaykin's disqualification on conflict of interest grounds because one of his colleagues at Zuckerman Spaeder represents ex-union official Donna Fisher, another key witness against Browne who also is a plaintiff in federal litigation against the union's pension fund in Md.
Fisher and the others sued the pension fund after a pension administrator denied their claims to various credits created by changes in the pension plan that were enacted when the union was merged in 1988. The administrator denied the claims, citing corruption in the merger vote; that corruption led to guilty pleas by several union officials, including Browne, for mail tampering. Fisher won her suit and was awarded $2.4 million; Zuckerman Spaeder was awarded $240,000 in legal fees. An appeal in the case is pending. Johnson ruled that Zuckerman Spaeder's simultaneous work on Fisher's behalf in the Md. civil suit and on Browne's behalf in the Fla. criminal case creates "an actual conflict of interest" for the firm and for Chaykin.
Johnson's ruling also offered a preview of Fisher's testimony as a witness against Browne. Johnson wrote, "Donna Fisher will testify that she heard the accountants advise Mr. Browne that the union finances were not in order in that the record keeping was inadequate; that she attended various mandatory and general union meetings and there were no detailed financial report to the members as required by the bylaws; that Mr. Browne appointed a Broward County custodian as the secretary/treasurer and that as far as she knew he was ill-equipped for the task; that she observed gambling in the union hall and loudly objected in Browne's presence; that she was told by Browne to sign paperwork that she felt was not in order; and that Browne told her that he knew his sister, co-defendant Devaney, was embezzling union funds before such was commonly known."
That kind of direct testimony will put Fisher's credibility at issue, and would put Chaykin in a conflicted position, according to Johnson. "Mr. Chaykin will have to cross-examine at length a current client," the magistrate wrote. "Her civil appeal remains pending on the merits and her relationship with the Zuckerman Spaeder firm is ongoing. That appeal directly impacts the Zuckerman Spaeder firm financially, in that some $240,000 in attorney fees remains on the line."
When Browne's trial finally takes place, it should be a "doozy" according to the Palm Beach Daily Business Rev. Browne says DOJ's trial strategy against him is aggressive. And people who never went before the grand jury that indicted him are now getting subpoenas to appear at his trial. Browne added the prospective witnesses are creating a mini-boom in the criminal defense bar. "Everybody and anybody I know is under a subpoena, dozens and dozens of people," Browne said. "As a matter of fact, all of the lawyers I would prefer to use, I can't, because they're using them." [Palm Beach Daily Business Rev. 5/15/02]
MARINE ENGINEERS (MEBA) / MARITIME UNION (NMU)
Employees Win Pension Suit
The U.S. Court of Appeals for the Fourth Cir. ruled May 20 that a pension
plan amendment adopted by the governing body of Dist. 1 of the merged Marine
Eng'rs Beneficial Ass'n and Nat'l Maritime Union was not invalidated after
union corruption was discovered and the merger rescinded.The governing
plan documents clearly gave the merged union the authority to amend the
plan unilaterally, said the opinion written by U.S. Cir. Judge Cynthia
H. Hall (9th Cir., Reagan), sitting by designation, in affirming the finding
of U.S. Dist. Judge Andre M. Davis (D. Md., Clinton) that the plan amendment,
which enabled certain plan participants to obtain pension credits for past
service with affiliated unions, was validly adopted.
In 1972, a defined benefit pension plan was created for employees of MEBA Dist. 1 (a.k.a. Pacific Coast Dist.). In 1987, MEBA merged with NMU to become Dist. 1-MEBA/NMU. The merger was rescinded six years later after it was discovered that the merger was the product of corrupt practices. During the six-year existence of MEBA/NMU, the merged union was governed by a body called the Dist. Executive Committee (DEC). In 1992, the committee voted to amend the pension plan's provision governing service credit and passed a resolution amending the plan to grant pension credits to plan participants for past service with affiliated unions and other entities. The individual named as the plan's administrator refused to recognize the validity of the 1992 amendment and denied three plan participants' request for service credit under the amendment.
The three participants/union employees denied credit under the amendment brought a suit under the Employee Retirement Income Security Act of 1974 challenging the administrator's refusal to recognize the 1992 amendment. The administrator and MEBA argued in the lawsuit that the amendment was unenforceable because the committee lacked the power to amend the plan, because the plan was inadequately funded to support the amendment, and because the amendment was the product of union corruption.
The appellate court upheld the validity the amendment and held that plan administrator abused his discretion in applying the amendment. The court further sided with the union employees in remanding the case to district court to determine the correct monetary award and attorneys' fees.
U.S. Cir. Judges Karen J. Williams (4th Cir., G.H.W. Bush) and William B. Traxler Jr. (4th Cir., Clinton) joined the opinion. Cyril V. Smith, Deborah S. Richardson, and Carole J. Yanofsky of Zuckerman Spaeder in Baltimore and Washington, D.C., represented the union employees. Christine A. Williams of Gordon, Feinblatt, Rothhman, Hoffberger & Hollander in Baltimore, represented the plan. [BNA 5/22/02]
POSTAL WORKERS (APWU)
DOL Sues to Invalidate Tainted Election at North Carolina Local
On May 2, the Dep't of Labor filed a federal lawsuit against Am. Postal
Workers Union Local 984 in Fayetteville, N.C., alleging violations of Title
IV of the Labor-Mgmt Reporting & Disclosure Act of 1959, which regulates
union elections. A DOL investigation, prompted by a union members' complaint,
found that the incumbent/winning candidate for local president misused
nonpublic union information about the member in the president's campaign
literature. DOL's suit seeks a new election for the office of local president.
[DOL 5/2/02]
PLUMBERS & PIPE FITTERS (UA)
California Boss Gets Away With Tainted Election Victory
U.S. Dist. Judge David F. Levi (E.D. Cal., G.H.W. Bush) ruled May 2
that the Dep't of Labor failed to show that a candidate for business agent
of United Ass'n of Plumbers & Pipe Fitters Local 442 violated the union's
election bylaws against electioneering and campaigning within 100 feet
of the polling place on election day. In 1997, the local based in Stockton
and Modesto, Cal., adopted bylaws that included detailed rules for conducting
elections. Section 28(j) of the bylaws states: "No campaigning or electioneering
shall be allowed inside the building where the election is conducted or
closer than 100 feet from the entrance to the building."
Nevertheless, candidate Ronald Hayes spent most of election day within 100 feet of the polling entrance of the local's office; he stood next to a driveway through which members had to pass, greeted them, and shook hands with them. As a result, DOL sued the local under Title IV of the Labor Mgmt. Reporting & Disclosure Act of 1959, which requires that unions conduct fair elections in accordance with the union constitution and bylaws. DOL sought to overturn the election results and hold a new election because it maintained Hayes, who won the election by a mere six votes, violated the bylaw.
Granting summary judgment to Local 442, Levi found no evidence that Hayes asked union members to vote for him. "In the absence of such evidence, the union's position that Hayes was not engaged in campaigning or electioneering and, therefore did not violate [the local's bylaws] is reasonable, if not ineluctable," Levi said. He found that courts should not substitute their judgment for that of union bosses in interpreting union rules unless the interpretation is patently unreasonable.
In Oct. 2000, Hayes, who was then the local president and was running instead for business agent, appointed three members to serve as the election committee for the Dec. 16, 2000, election. As a candidate for business agent, Hayes could have designated an election observer, but he did not do so. The voting took place inside the local's meeting hall, and a sign was posted prohibiting campaigning and electioneering within 100 feet of the entrance.
Hayes was the first person to vote. He told a member of the election committee, who did not object, that he planned to stay on union property during the vote because he was concerned about possible voter intimidation. Hayes spent about an hour in his truck in the parking lot and then spent most of the rest of the day standing at the edge of the driveway to the union property. He spoke with approximately 111 of the 233 members who cast votes. Again, his margin of victory was only six votes. [BNA 5/16/02]
TEACHERS (NEA) / UNION DUES
Union Settles Religious Discrimination Claims with Western Pennsylvania
Teacher
Facing religious discrimination charges, the Pa. State Educ. Ass'n
begrudgingly agreed May 14 to honor the right of a school teacher in Armstrong,
Pa., to refrain from paying dues to the union because the organization's
social advocacy violated his religious convictions. Carl C. Glock, III,
a practicing Christian, objected to association with the Armstrong Educ.
Ass'n and its affiliates, the PSEA, and Nat'l Educ. Ass'n, because of their
support of resolutions calling for special legal protections for homosexuality,
abdicating parental responsibility, and criticizing the practice of home
schooling.
After filing charges at the Equal Employment Opportunity Comm'n, Glock's attorney, provided by the Nat'l Right to Work Legal Def. Fdn., helped persuade the union hierarchy to halt its discrimination by allowing Glock to donate his monthly agency fee to the W. Pa. Sch. for the Blind, rather than funding the AEA union and its affiliates.
"For far too long, union officials have ordered people of faith to shut up and pay up," said NRTWLDF spokesman Stefan Gleason. "It's outrageous for the union hierarchy to demand that a teacher put allegiance to the union's radical social agenda ahead of his conscience."
The case arose when AEA bosses would only donate a portion of Glock's 1999-2000 dues to charity and intended to keep the rest. During the 2000-01 school year, the AEA refused to honor Glock's status as a religious objector and confiscated his entire dues payment for the union. In response, Glock contacted NRTWLDF. Under Title VII of the Civil Rights Act of 1964, union bosses may not force any employee to financially support a union if doing so violates the employee's sincerely held religious beliefs. To avoid the conflict between an employee's faith and a requirement to pay fees to a union he believes to be immoral, the law requires union bosses to accommodate the employee ? most often by designating a mutually acceptable charity to accept the funds. [NRTWLDF 5/14/02]
EEOC Threatens Union With Prosecution
In response to religious discrimination charges brought by Ohio teacher
Dennis Robey, the Equal Employment Opportunity Comm'n threatens to prosecute
the Nat'l Educ. Ass'n on May 20, if the union does not stop forcing
teachers to endure annually a burdensome and invasive process before respecting
their religious objections to union affiliation. With the help of Nat'l
Right to Work Legal Def. Fdn. attorneys, Robey brought charges against
NEA and its local affiliates after they refused to honor his religious
objection to supporting the union because it promotes pro-abortion, pro-homosexuality
positions and constantly attempts to interfere with parental rights.
"The NEA union's illegal scheme is intended to force teachers of faith to shut up and pay up," said NRTWLDF vice president Stefan Gleason. "The EEOC's action further underscores that the nation's largest teacher union is systematically persecuting people of faith."
Robey began to make his religious objections known in 1995. During the 1999-2000 school year, union bosses rebuffed his longstanding objection and demanded that every year he must describe, in detail, his deeply held religious views, fill out a lengthy and invasive form, and file it with the union. On the form, union officials asked probing personal questions about his relationship with God, his "religious affiliation," and required him to obtain a signature from a "religious official" attesting to the validity of his beliefs.
Under Title VII of the Civil Rights Act of 1964, union bosses may not force any employee to financially support a union if doing so violates the employee's sincerely held religious beliefs. In order to accommodate the conflict between an employee's faith and a requirement to pay fees to a union he believes to be immoral, the law allows employees instead to donate that money to charity.
EEOC agreed with NRTWLDF attorneys' arguments that the nationwide union
policy unlawfully places an undue burden on teachers, and that teachers
need only file a one-time objection to paying forced union dues.
The union's illegal scheme is employed nationally against thousands of
teachers whose sincerely held religious beliefs prevent them from supporting
a union. Under EEOC's ruling, NEA must stop the use of these practices
or face further legal action. [NRTWLDF 5/20/02]
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