Protest Decisions

ELECTION APPEALS MASTER

--------------------------------------------------------X

IN RE: FRED ZUCKERMAN,

            PROTESTOR.                                                                        2015-2016 EAM 21 KAR)                                                                                                                                    DECISION RE 2015 ESD 63

--------------------------------------------------------X

Protest Decision 2015 ESD 63 (ESD 63), regarding a protest by Fred Zuckerman, a member of Local Union 89 and candidate for International office, was issued on December 28, 2015 (OES Case No. P-001-051115-NA). ESD 63 concerns services provided by employees of the Paris Hotel in Las Vegas, Nevada to the Hoffa-Hall 2016 Campaign (Hoffa Campaign) in connection with a kickoff rally held by the Hoffa Campaign at the hotel on May 10, 2015, at the end of proceedings at the May 10 session of the IBT’s Unity Conference.  The Paris Hotel is part of the Bally’s/Paris complex, which includes a convention center.  Mr. Zuckerman’s protest alleged that the Hoffa Campaign violated the Rules by soliciting, accepting and using an impermissible employer contribution.  The Election Supervisor found two Rules violations and ordered remedial relief with respect to the IBT and the Hoffa Campaign.

 

 On December 30, 2015, appeals of ESD 63 were filed by the IBT, Mr. Zuckerman, and the Hoffa Campaign.  By Notice of Hearing sent to all distributees of ESD 63, a telephonic hearing was scheduled for January 12, 2016.  On January 7, 2016, the Election Supervisor submitted a written response to the appeals (OES January 7 Letter).  Also on January 7, 2016, the Election Appeals Master received submissions from Teamsters for a Democratic Union (TDU), the Teamsters United slate, and a supplemental submission from the Hoffa Campaign.

 

A telephonic hearing was held on January 12, 2016.  The following individuals attended the hearing:   David O’Brien Suetholz, Esq., on behalf of Mr. Zuckerman, Jeffrey J. Ellison, Esq., on behalf of the Election Supervisor (OES), Bradley T. Raymond, Esq., on behalf of the IBT, David J. Hoffa, Esq., on behalf of the Hoffa Campaign, Louie Nikolaidis, Esq., on behalf of the Teamsters United slate, and Christy Bailey (Hoffa Campaign).

 

            For the reasons set forth below, the appeals of ESD 63 by Mr. Zuckerman and the Hoffa Campaign are DENIED, the appeal of the IBT is withdrawn, and the decision of the Election Supervisor is AFFIRMED, as modified by the agreement as to remedy between the Election Supervisor and the IBT.

 

Findings of Fact

            The following facts, which are substantially drawn from ESD 63, are undisputed unless specifically noted:      

As noted above, the Hoffa Campaign held a kick-off event at the Paris Hotel in Las Vegas, Nevada on Sunday, May 10, 2015.  At the event, James Hoffa, the current IBT General President and candidate for re-election, introduced the 26 other members of the slate.  The event was scheduled to start after the end of proceedings at the May 10 session of the IBT’s Unity Conference, an annual event that the IBT hosts at the Bally’s/Paris convention center except in years in which the IBT holds its quinquennial international convention there.

Todd Thompson is employed by the IBT as a special assistant to the General President.  He also serves as a representative for the Hoffa Campaign, a position similar to one he has held for at least the past three election cycles.  Mr. Thompson was responsible for arranging space for the Hoffa Campaign’s use on the weekend of May 9 and 10.  In that capacity, he rented a conference room in the Bally’s/Paris complex for the morning of Saturday, May 9 for the slate members to discuss campaign issues.  In addition, he arranged the ballroom space and cash bar set-up and staffing for the May 10 kick-off event.  

            Misty Spano is Assistant Director of Catering/Convention Services for Bally’s/Paris. Ms. Spano was the representative assigned to deal with the IBT on arrangements for the 2015 Unity Conference; in that role, her contact with the IBT was W.C. Smith, Executive Assistant to General President Hoffa.  Ms. Spano was also the representative assigned to deal with Mr. Thompson on rentals for the Hoffa Campaign. 

In the two weeks running up to the events, Mr. Thompson had extensive email exchanges and phone conversations with Ms. Spano,  Mr. Thompson’s room rental arrangements were largely complete in the initial exchange of emails on April 23, 2015.  The charge for the two-hour rental of the Director’s Room, a ground floor conference room of about 1,100 square feet with advertised capacity of 20,  in Bally’s north tower, was set at $500.  This was acceptable to Mr. Thompson, who asked merely that 30 chairs be provided for the room even if they did not all fit around the conference table.  Ms. Spano discovered on April 29 that the Director’s Room was already booked for the requested time by another party.  She moved the rental to the Las Vegas 1, a third-floor conference room of about 1,400 square feet in the south tower, and cut the rental price to $250.  She told the OES investigator that she lowered the price as an accommodation because of her mistake in booking a room that was unavailable.  When Mr. Thompson learned of the change to Las Vegas 1, he asked that the meeting be moved instead to Skyview 6, a 5,500 square foot conference room on the 26^th floor of Bally’s north tower with advertised banquet capacity of 370.  This request was granted; the rental price remained at $250. 

For the kick-off event, Mr. Thompson rented the Versailles 1 & 2 ballrooms on the ground floor of the Paris Hotel, a combined 3,800 square feet of space.  The rental times ran from 3 p.m. to 7 p.m., with the first two hours reserved for set-up, with cash bar starting at 5 p.m. and running for 90 minutes.  The rental arrangement set a cash bar minimum of $1,500; if the minimum was not met, the difference was to be charged as room rental.  Ms. Spano told the OES investigator that cash bar sales came to $3,200, so the Hoffa Campaign had no rental expense for the ballroom, although it paid $300 each for two bartenders who staffed the event.

On April 23, when Ms. Spano presented the terms of the waived room rental for Versailles if cash bar proceeds reached $1,500, Mr. Thompson asked in email, “Would you give any other person the same agreement?”  Ms. Spano replied by email, “For the limited amount of time that the room is being used I would make the same arrangement.”   On April 25 when discussing by email some details of the rentals, Mr. Thompson asked, “Also what would the cost be to deliver recorded call to all rooms in the ibt room block.”^[1]  He asked further, “And how much would it be to either hand a flyer to every person in the room block as they check in at front desk and or how much would it be to have a flyer dropped at every room door the night they check in so they see it in the morning?”

Ms. Spano did not respond to these questions.  On May 5, about ten days later, Mr. Thompson asked them again.  Ms. Spano replied that same day by sending Mr. Thompson the Bally’s/Paris official price list for “On Property Marketing Opportunities.”  This list offered “Guest Delivery of Materials,” consisting of a choice of delivery “Inside Rooms” for $3.75, “Outside Room” for $2.75, or “Door Hangers” for $2.75, all on a per item basis.  The list also offered “Guestroom Voice Message Delivery” for $1.25 per room, per day (Production $275).  Also available were such things as television channel rental ($2,500 per channel per day), Streets of Paris light pole banners ($10,000 for the duration of the event), customized guestroom keys ($1.25 per key; minimum order 5,800), and blackjack table felts ($2,000 per table per day), among many others.  The official price list did not offer the service of check-in clerks giving guests an arrival package.  

            On May 7 at 8:21 a.m. PDT, Mr. Thompson emailed Ms. Spano this question: “Is there a service to have a flyer handed to the person when they check in and get their keys?  If so how much for the service?”  Ms. Spano replied less than an hour later at 9:15 a.m. PDT: “I can arrange this.  It is $1.50 per flyer but depends on how many.  Can you let me know how many people this would go out to and how would I know who gets the flyer.  Also I have to see the flyer to have it approved.”

A few minutes after receiving Ms. Spano’s May 7 email, Mr. Thompson replied at 9:39 a.m. PDT as follows:

 

If we decided to do it, we would want it to be on Saturday [May 9, the day before the Hoffa Campaign kick-off event].  This is the highest check-in day for the Teamster block of about 850 rooms.  We did this a few years ago and the front desk agent was able to see that the person checking in was in the Teamster room block.^[2]

 

That was also the way we were able to have the flyers dropped off at the rooms.  The campaign is not allowed to get the list from the ibt so that is how we distributed information before.

 

If things have changed about being able to see the room block let me know.

 

Ms. Spano replied at noon the same day, May 7:

 

Thank you for the info.  Can you let me know today if you will want to do it.   Also I will need to know that this is approved by the teamsters group that I am working with on the convention and check with the hotel as far as execution for the entire group on check in day.

 

 About a half hour later, at 12:37 p.m. PDT, Mr. Thompson replied:

 

I think if we could speak on the phone for one minute I will be able to make a final decision.

 

They spoke by phone about 1 p.m. PDT and made the arrangements.  According to Mr. Thompson, Ms. Spano offered to drop the fee altogether for the delivery service, saying that the hotel would do it for free.  Mr. Thompson said he told Ms. Spano he was uncomfortable with this proposal of free delivery, saying that he insisted she charge the Hoffa Campaign for the service.  When Ms. Spano suggested a $500 flat rate for check-in clerk distribution of up to 1,000 flyers to arriving guests, Mr. Thompson said he asked Ms. Spano if she would offer the same rate to anyone else.  Thompson said that Ms. Spano replied that she would.  According to Mr. Thompson, nothing was said during the phone call about Ms. Spano’s email statement of an hour earlier that she needed to know that the flyer distribution was “approved by the teamsters group that I am working with.”  Mr. Thompson told the OES investigator that whether the IBT approved of the distribution was irrelevant to him, saying that he knew he had the right to hire the service he was seeking without IBT approval.

Contradicting Mr. Thompson, Ms. Spano told the OES investigator she did not offer the service for free.  The service was not listed on any price list, public or internal, and Ms. Spano concluded that she had discretion both to offer the service and to set the price for it.  She said she did not offer the service for free because she saw the Hoffa Campaign’s request as an opportunity to “up sell” and generate additional revenue for the hotel.  She said she ultimately quoted a price of $500 for distribution of up to 1,000 flyers because she thought it was a fair price for the service.  In addition, she said two additional factors led her to the $500 flat rate.  First, the effort involved in distributing the flyers at check-in was considerably less than having bell staff distribute flyers to guestrooms.  Second, Ms. Spano checked with the check-in staff management and confirmed that the check-in department would not charge back to catering/convention services for the flyer distribution at check-in.  The published price for bell staff delivery of flyers to rooms was $2.75 per room, and Ms. Spano reasoned that a significantly lower price commensurate with substantially lower effort would be appropriate for the check-in clerk distribution of the flyer, especially given that the check-in department was not assessing an internal charge-back to catering/convention services.  She acknowledged that the $500 flat rate she charged for check-in clerk delivery of up to 1,000 flyers – approximately 50¢ a flyer – was substantially less than the $1.50 per item she had initially quoted Thompson.  She explained that she pegged her initial price quote “high” to make sure that she would not lose money in the event the check-in desk charged back to catering/convention services.  When she learned that no charge-back would be made, Ms. Spano said she felt she had flexibility to lower the price while still generating revenue for the hotel. 

Contradicting Mr. Thompson on another point, Ms. Spano told the OES investigator that she repeated to Mr. Thompson during the phone call that she needed to see the flyer before she could agree to have it distributed and that the distribution needed to be approved by the IBT.  At 1:43 p.m. PDT, Mr. Thompson emailed the flyer to Ms. Spano and confirmed the arrangements:

Attached is the flyer. Tomorrow afternoon we will provide to you 1000 union printed copies. As agreed we are asking that each person in the IBT room block be given one flyer at check in. (Please only give one per room.)  We agree to the overall 500 dollar flat rate. Thank you for your assistance with this.

 

The flyer was a single-page, one-sided, two-color announcement of date, time and place of the Hoffa-Hall 2016 kick-off fundraiser.  Ms. Spano told the OES investigator that the policy of Bally’s/Paris governing such a service had three components:  1) the hotel views the message and determines it to be suitable for distribution, i.e., not offensive; 2) the front desk manager approves, based on workload; and 3) the conference organizer approves.  Ms. Spano received a copy of the flyer and saw it was not offensive.  Check-in clerk workload was apparently not an issue because, as noted, above, that department was not assessing any internal charge to catering for the service.  For the third element, Ms. Spano said she called W.C. Smith, the IBT official with whom she interfaced on Unity Conference convention services.  When she reached him, she said she told him the hotel had been asked by the Hoffa Campaign to distribute flyers to arriving guests at check-in.  She said she asked Mr. Smith if that was “ok” and he told her “yes.”  

Mr. Smith told the OES investigator that he arranged catering and space for a Unity Conference event on Monday evening, May 11, but had no other involvement with conference logistics.  He recalled two contacts with Ms. Spano.  The first was a May 7 in-person meeting when he and three others from the IBT staff met with Bally’s catering staff.  Flyer distribution was not a subject of that meeting.  The second contact was a Friday, May 8 phone call in which Ms. Spano told him that the Hoffa campaign wanted to have check-in clerks pass out Hoffa-Hall flyers to arriving Unity Conference guests on Saturday (May 9).  He said she asked if it was okay to distribute the flyers.  Mr. Smith said he told her:  “I don’t see a problem with it.”  After the call, Mr. Smith took no other action regarding the flyer distribution and had no further involvement in the matter.  Mr. Smith denies any role in the Hoffa Campaign. 

Ms. Spano told the OES investigator she was unwilling to do anything with hotel guests in a block to which the entity that booked the block might object, so, in this case, she checked with Mr. Smith to insure that the distribution was okay.  She said she would have done the same thing had any other person, entity or vendor asked that flyers or other materials be distributed to arriving Teamsters.  According to Ms. Spano, the general rule is that a conference organizer or a guests staying in the block of rooms reserved by the conference organizer can hire the hotel to distribute material at check-in to others in the same block of rooms.  Asked specifically, Ms. Spano said that the material that could be delivered at check-in included notices of official meetings of the conference, notices of unofficial meetings within the group, or even flyers advertising sale of Girl Scout cookies.  She said she had been trained to ask the room block host about such distribution, however, rather than have to answer potentially angry questions from the host after the fact.

After her phone call with Mr. Smith, Ms. Spano delivered the 1,000 flyers she received from Mr. Thompson to front desk supervision on May 9, who parceled them out to check-in clerks with instructions that they be delivered to Teamsters checking in that day.  Bally’s/Paris issued an invoice to “Hoffa-Hall 2016 Campaign,” directed to the campaign’s address in Washington, D.C., charging the campaign the agreed-upon $500 sum.  Conference attendees checked in on May 8, 9, and 10.  While most appear to have checked in on May 9, a substantial number of check-ins were also processed on May 8 and May 10.  

During the investigation, other Paris catering/convention coordinators were asked whether the hotel would provide the service of having check-in clerks distribute literature provided by a party unaffiliated with guests booked into a block of rooms.  One coordinator said the service would be available only to the convention host that had arranged the guest room block.  Another said guest room delivery service could be had for $3.50 per item per guest but no such service was available at the check-in desk.  When the OES investigator asked Ms. Spano about these other responses, she said she was not surprised, given that the service she sold to Mr. Thompson did not appear on the price list of available services.  She explained that she saw an opportunity to provide a service for a fee and worked to make it happen.

 The IBT entered into a Convention Sales Agreement with Bally’s/Paris dated June 9, 2009, providing for reserved room block, event and convention space reservations, and other terms and conditions for the 2015 Unity Conference.  Among many other terms in the 27-page agreement was paragraph 25, “Contributions/Donations,” which included the following provision:

 

The Hotel understand[s] and agree[s] that as a vendor to the IBT, neither the Hotel nor any individual or entity on the Hotels’ behalf [may] make any contribution supporting or opposing any candidate in any internal IBT election and, by signing this agreement, certify[ies] that neither The Hotel nor anyone on their behalf has or will make any such contribution.  The Hotel will provide any information reasonably necessary to verify compliance with this prohibition and will cooperate in any investigation that may be conducted by IBT, or anyone on its behalf with respect to any allegation concerning such a contribution.

 

The same numbered paragraph contained the hotel’s agreement to abide by the IBT’s Vendor Code of Conduct, which was attached to and incorporated within the convention sales agreement.  Of relevance in the Code was paragraph 8, under the heading “Improper Influence and Conflicts of Interest,” which read:

 

Vendors are prohibited from making contributions of any kind, either directly or indirectly, to any candidate or slate of candidates for office either within the International Union or any affiliate, and must certify their compliance with this provision upon request.

 

            Each person attending the kick-off event was charged $20 to enter; some attendees contributed more than the admission charge.  According to the fundraising report the campaign filed with its period 1 CCER, 620 persons attended and $21,265.00 was raised in contributions.  

            Mr. Thompson told the OES investigator that the flyers that were not given to Ms. Spano were distributed by campaign volunteers on May 10, who handed them out in the common hallway immediately outside the convention space where the Unity Conference was being held, at the end of the day’s session (about 4:00 pm).  The kick-off event commenced later that day at 5:00 pm.

The Protest

            The above facts were developed in an investigation by the Election Supervisor conducted in response to a protest filed by Fred Zuckerman against the Hoffa-Hall Slate on May 11, 2015 (the Protest).  Mr. Zuckerman observed the distribution of the “Hoffa-Hall Fundraiser” flyer to Teamster registrants at the Paris Hotel reception desk on May 9, 2015.  He asserted that the distribution of the flyers constitute a violation of Article XI (1)(a), which provides that “No candidate for election shall accept or use any contributions or other things of value received from any employers, representative of an employer, foundation, trust, or any similar entity. Nothing herein shall be interpreted to prohibit receipt of contributions from fellow employees and members of this International Union.  Violation of this provision shall be grounds for removal from office.”  Mr. Zuckerman also cited Article XI (1)(b), which provides that “Only contributions which are properly solicited, made, accepted, and reported under these Rules may be expended or used by candidates, slates, or independent committees for the 2015-2016 International Union Delegate and Officer Election.”  Mr. Zuckerman requested that the Election Supervisor “investigate how the Hoffa-Hall Campaign managed to get the Paris Hotel employees to distribute this campaign material?; to establish what this ‘thing of value’ is worth; issue a cease and desist order and find the Hoffa-Hall campaign an amount equal to or greater than the aforementioned fundraiser.  We also request a remedial mailing to all attendees at the 2015 Teamsters Unity conference.”

Determination of the Election Supervisor

The Election Supervisor noted that “[t]he Rules prohibit employers from making any contributions to influence the election of a candidate.  Article XI, Section (b)(2).  Also, no union funds, other union things of value, or facilities may be used to influence the election of a candidate unless the union is compensated at fair market value, and all candidates are advised of the opportunity in advance and have equal access to the facilities.  Article XI, Section (b)(6).”  ESD 63 at 6. 

Based upon the facts set forth above, the Election Supervisor found that the Hoffa Campaign impermissibly solicited and accepted an employer contribution, that Bally’s/Paris impermissibly granted an employer contribution to the Hoffa Campaign, and that the IBT impermissibly authorized distribution of campaign materials without providing advance written notice to all known candidates not aligned with the Hoffa campaign of the opportunity for such distribution, in violation of Article XI (1)(b)(2) and (b)(6). 

Employer Contribution

            With respect to employer contributions, the Election Supervisor observed that “[t]he Rules do not prohibit purchase of services and rental of facilities at fair market value from an employer . . . .”  Zuckerman, 2011 ESD 224 (April 19, 2011); see also Rushing, 2000 ESD 51 (November 28, 2000).  Nor is there any bar to “hosting a campaign event at a facility at which the IBT is also conducting union business, provided the candidate pays the expenses associated with the campaign event.”  Zuckerman, supra.  The Election Supervisor further found, however, that “where service appears to be offered and priced on an ad hoc basis, the totality of the circumstances must be considered to determine whether the pricing reflects an improper contribution to a candidate.”  ESD 63 at 7.

 

The Election Supervisor noted that

 Our prior decisions involving campaigns purchasing services from third parties such as hotels concerned whether the service provider improperly contributed to a campaign by selling the services at a discount unavailable to others or clearly motivated by a desire to do a favor for the union.  Thus, in Rushing, the 2001 “Unity Slate” had a “campaign kickoff” flyer distributed to rooms of persons registered for that year’s IBT Unity conference.  Bally’s charged the campaign a distribution fee of $0.55 per flyer, a discount from standard pricing of $1.00 per flyer but a rate that the Bally’s manager at the time set to defray the labor cost of personal delivery of 1,800 leaflets to hotel guest rooms.^[3]  An IBT official flyer was distributed at the same discounted $0.55 rate because the IBT was a “significant customer.”  The hotel convention services manager made the discounted rate available to the campaign “because of the ‘Hoffa relationship.’”  Rushing, 2000 EAD 51 at 7-8.  The Election Administrator ordered the Unity Slate to reimburse Bally’s for the difference between the discounted price and the hotel’s regular price for the service.  Id. at 15.  The violation was found in Rushing because the hotel admitted granting the Unity Slate a special rate not available to similar entities not affiliated with its customer, the IBT.   

 

ESD 63 at 7.

 

The Election Supervisor acknowledged that:

 

Where campaigns obtained services – even at a discount, and even where that was obtained through use of the Teamsters affiliation – past cases have found a discount not to violate the Rules where the evidence showed that others apparently could have obtained the same services on equal terms.  In Davies, P1062 EO (October 29, 1996), an IBT member booked a Ron Carey campaign event at the Vancouver, Canada Biltmore Hotel.  The booking was made in the name of Teamsters Canada, and the hotel rented the space at a discount for that reason.  The hotel also stated that the discount would be available to “anyone who identified himself as a Teamster.”  Id. at 5.  The Election Officer concluded that the Carey campaign’s misuse of the Teamsters Canada name violated the Rules, and ordered the member to cease and desist from similar activity.  The protest was denied in all other respects because the hotel charges were not in fact paid by Teamsters Canada or any IBT entity and there was no improper employer contribution to the Carey campaign because the hotel stated it would provide the same discount to any Teamster.  Id. at 3-4.  In Zuckerman, supra, the Hoffa-Hall 2011 campaign had contracted with a hotel for a room rental and catering services in connection with a campaign event.  UPS national grievance panel meetings were taking place at that same hotel.  When asked by the campaign, the hotel distributed to rooms of IBT guests a pre-recorded voicemail invitation to the campaign event.  The investigation found that the hotel provided such voicemail services “without charge to persons doing business with the hotel.”  Id. at 2.  Thus, the free voicemail service was not an improper employer contribution in the form of a discounted deal.

 

ESD 63 at 7-8.  

 

The Election Supervisor found that the present case “falls squarely within Zuckerman and Rushing.”  ESD 63 at 8.   The Election Supervisor noted that:

While Spano’s contact with Thompson concerned services to Hoffa-Hall 2016, she was also responsible for the Unity Conference arrangements with the IBT.  She told Thompson that she needed “to know that this is approved by the teamsters group that I am working with on the convention” before proceeding.  For Spano, the Unity Conference and the leaflet distribution were related.  Under the circumstances here, we find that Spano’s flexible approach to pricing was influenced by her simultaneous dealings with the IBT to host the Unity Conference.  

 

The facts of the negotiation support this conclusion.  Spano initially quoted Thompson $1.50 per item, then (according to Thompson) offered the service for free, and finally quoted the $0.50 per item rate.  That final price was, literally, an accommodation to Thompson’s request to charge something for the service and Spano appears to have picked a minimal amount ad hoc.  The charge is less than 20% of the $2.75 per item price for distribution of flyers outside guest rooms.  No doubt handing out a leaflet at check-in with the guest’s room access card would involve less labor then sending bell staff from floor to floor and room to room to slip leaflets under guest doors.  But Spano’s approach provides no basis to conclude that the charge bears some relationship to the hotel’s usual concerns for labor costs and profit.^[4]  The responses of other catering/convention coordinators to a hypothetical inquiry about distribution provide, at the least, confirmation that Spano’s discretion was influenced (like her predecessor, in Rushing) by her dealing with the distribution request contemporaneously with her responsibilities as the hotel’s liaison for the Unity Conference.

  

ESD 63 at 8.

 

The Election Supervisor acknowledged that Mr. Thompson attempted to avoid a Rules violation by asking Spano if she would give the same price to any other person, and receiving assurances that she would, but found this exchange “insufficient to avoid the rule set down in Rushing.”  ESD 63 at 8-9.  The Election Supervisor noted that the stated pricing for other comparable distribution of materials and information was significantly higher than the $0.50 per guest price Mr. Thompson received.  The Election Supervisor further noted that Mr. Thompson “has long experience in the IBT International officer campaigns, and should have questioned Spano further about the offer being made in the context of the Unity Conference.”  ESD 63 at 9. Under these circumstances, the Election Supervisor gave Mr. Thompson’s “limited inquiry” and Ms. Spano’s answer “no weight.”  ESD 63 at 9. 

IBT Approval

            The Election Supervisor determined that where the IBT is conducting business at a hotel and a hotel service is made available to a candidate on the condition of the IBT’s approval, the service becomes a union resource subject to the rule requiring notice to all candidates and an opportunity for equal access and notice.  Rules, Article XI, Section (b)(6).

The Election Supervisor acknowledged that had another candidate planned to have a meeting and requested the same flyer distribution service at the 2015 Unity Conference, Bally’s/Paris would have had to provide it on terms equal to those afforded to Hoffa Campaign (in this case, the $0.50 rate Ms. Spano gave Mr. Thompson), (1) because the Rules bar an employer from discriminating between candidates; and (2) the hotel’s contract with the IBT bars it from making any sort of campaign contribution to candidates.  The Election Supervisor held, however, that “[w]hile actually providing the same service at the same price to all candidates will generally defeat a claim that an employer has impermissibly discounted its services, in cases like this where the employer has contracted only with one candidate, we will look to the totality of the circumstances to assess whether an impermissible employer contribution in the form of a discount has been provided.”  ESD 63 at 9.  

            The Election Supervisor found it significant that Ms. Spano told Mr. Thompson that she had to know if the IBT “approved” the distribution the campaign requested, and then called Mr. Smith at the IBT to ask if the IBT approved, which was required by hotel policy.  The Election Supervisor noted that “[i]In Rushing, the hotel representative stated that it had accommodated the interests of a significant customer by giving a discount to the campaign based on the ‘Hoffa relationship’ that is, doing something that the hotel believed would be viewed favorably by its significant customer the IBT.  Similarly, in this case, Spano asked the IBT if the distribution was ‘approved’ to avoid upsetting that same significant hotel customer.”  ESD 63 at 9.  

 

            The Election Supervisor also noted that:

 

The IBT’s contract with Bally’s does not speak to providing these types of services and the Union had no reason to expect Spano’s request any more than it would expect such contact relating to contracting for any other service or meeting room.  Spano, however, treated this flyer distribution very differently from other services; she had to get the IBT’s approval to distribute the campaign flyer at check-in, but she did not need any such approval to rent rooms to the campaign.  Thompson knew Spano considered the flyer distribution different than other services because, in contrast to booking meeting rooms, Spano told Thompson specifically that IBT approval was required to distribute the flyer at checkin.  And once she made the phone call, Smith knew that Bally’s/Paris required the IBT to approve a campaign’s use of this particular hotel service.  That the IBT was – unexpectedly, from its perspective – put into a position of control is clear.  Had Smith disapproved, the flyers would not have been distributed at check-in and Hoffa-Hall 2016 would have been remitted to the volunteer distribution it actually organized plus (if it chose) other hotel services not subject to IBT approval.  Bally’s/Paris, however, put the IBT in the position of controlling access to distributing information at the point of hotel check-in.  And once it approved one campaign’s use of that channel, the IBT was obligated under Rules, Article XI, Section 1(b)(6) to notify other International officer campaigns of the opportunity to use that channel.  Thompson too was obligated to help the IBT comply with that obligation.  

 

ESD 63 at 9.  The Election Supervisor therefore found that “[t]he thrusting of control by Bally’s/Paris onto the IBT makes this analogous to the situation where a union that intends to open its own facilities to candidates must give all candidates equal access and notice of the availability of the facilities.  Compare Rules, Article VII, Section 12(c) and Article XI, Section 1(b)(6).”  ESD 63 at 9.

 

The Election Supervisor relied upon his decision in Gegare, 2010 ESD 20 (August 15, 2010). 

 

In that case, the campaign manager for an International officer candidate rented the Local Union 533 hall to conduct registration for a campaign fundraiser.  The campaign manager told the local union’s principal officer that if the hall was made available to one campaign it would have to be made available to other candidates.  Although there was no ready precedent for renting the hall, the principal officer set a price, the campaign agreed to the rental and paid the charge, and the event went forward.  The local union, however, never notified other candidates that that the hall was equally available to them, and other International officer candidates later filed a protest.  The Election Supervisor found that the local union violated the Rules because it did not give the required notice that its facility was equally available to all candidates.  Id. at 2-3.  The Election Supervisor also found that the campaign, aware of the notice obligation, should have acted to help the local meet the notice obligation and violated the Rules by not doing so.  Id.  The Election Supervisor contrasted the present case with a situation in which a local union that had made its union hall available for rental by a campaign avoided a Rules violation where the local union president wrote to all known candidates four days before the event and advised them that the union hall was available for campaign rental.  See, Gegare, 2010 ESD 19 (August 15, 2010).

 

  ESD 63 at 9-10.

 

The Election Supervisor found that here, as in Gegare, 2010 ESD 20, Mr. Smith at the IBT and Mr. Thompson at the Hoffa-Hall 2016 Campaign knew that Bally’s/Paris had put the IBT in the position of approving whether to distribute campaign flyers at check-in.  Possessing this knowledge, and with the IBT allowing the distribution to proceed, “the IBT should have provided notice of this service to other, known International officer candidates and Thompson should have offered assistance to the IBT in meeting that obligation.”  ESD 63 at 10.  

 

The Election Supervisor pointed out that

 

In Gegare, 2010 ESD 20, we noted that the protestors did not allege that they had been denied use of the local union hall for campaign purposes.  Here, as well, the protestor did not ask the hotel to distribute campaign flyers so there is no record that the hotel actually denied equal access to this service.  This incident may reflect nothing more than one campaign planning to hold an event at the tail end of an IBT conference and then negotiating with the hotel to distribute flyers for publicity (in addition to the campaign’s own distribution through volunteers).  Nothing impeded any other campaign from organizing a similar event and negotiating with the hotel for similar services.  That they chose not to, however, has no bearing on the Rules violation we find here.  Thompson’s ready acceptance of Spano’s ad hoc pricing far below any listed price for distribution service and the lack of notice to other candidates once Bally’s/Paris put the IBT in the position to approve the distribution violate the Rules, even though no other candidate sought to hire the same service Thompson contracted for.  Both Smith at the IBT, and Thompson for the campaign, should have recognized that notice obligation.  

 

ESD 63 at 10.

 

Based upon the above facts and analysis, the Election Supervisor granted the protest, finding that Bally’s/Paris made and the Hoffa Campaign received an impermissible employer contribution in the form of a discounted price for the flyer distribution service, that the IBT did not comply with the notice obligation of Rules, Article XI, Section 1(b)(6), and that the Hoffa Campaign (knowing the IBT was asked to approve) did not assist in ensuring compliance with that requirement.  

 

Remedy

            The Election Supervisor directed the IBT, when it controls access to a facility or service that a candidate for International office or delegate seeks to use for purposes of campaigning, to give advance written notice of the availability of the facility or service for campaign use to all candidates without discrimination.  ESD 63 at 11.   

The Election Supervisor directed the Hoffa Campaign, “when seeking campaign use of a union facility or use of a facility where it knows that access is controlled by a union, to advise the service provider of the requirements of the Rules, namely, the obligations not to discriminate against any candidate, to charge fair market value for use of the facilities, and that the union is required to provide advance notice to candidates if it approves use of the facility or service.  The campaign should assist the union that holds approval authority in complying with the requirement to give advance written notice of the availability of the facility or service by identifying the candidates, assembling contact information for them, and preparing and transmitting the notice, although the notice must come from the union and not from the campaign.  Such advance written notice must be provided before concluding a rental or service agreement.”  ESD 63 at 11.

            The Election Supervisor further ordered the Hoffa Campaign to pay a fine to OES of $3,000.00, which the Election Supervisor characterized as “strictly remedial in nature and is intended to encourage compliance with and deter future violations of the Rules.  The basis for the fine is that the price the hotel and the campaign agreed upon for the distribution service at issue here was $1,000.00 less than the first quote for the service.  We treble that figure to impress upon the campaign its Rules compliance obligations when engaging services at facilities where the IBT is a significant customer and controls access to those services.”  ESD 63 at 11. 

            Finally, the Election Supervisor ordered the Hoffa Campaign to mail a notice (annexed to ESD 63) to all Teamster members who registered for the 2015 Unity Conference, and directed the IBT to supply the mailing addresses for these persons to the campaign. The Election Supervisor directed that the Hoffa Campaign “may use the list solely for the purpose of complying with the remedy in this case and is prohibited from using the list or any information on the list for any other purpose, including a campaign purpose.”  ESD 63 at 11.  The Election Supervisor observed that “[t]his notice publication is strictly remedial in nature and is intended to educate the recipients, many of whom are local union officials who may be in a similar position to that of the IBT to control candidate access to distribution of literature, on the requirements of the Rules and our finding that the IBT and Hoffa-Hall 2016 have violated them.”   Id.

            The Election Supervisor declined to order any further monetary relief and, specifically, declined to order any return of funds raised by the Hoffa Campaign at the campaign event.  The Election Supervisor found:

 

There was nothing improper about holding the campaign kickoff event at Bally’s/Paris.  In both Rushing, and Gegare, 2010 ESD 20, the campaigns were not ordered to disgorge funds raised.  The remedy in the former addressed the value of the discount to the campaign, and in the latter advised the union and campaigns to pay particular attention to the requirement of notice.  Our remedy here is based on those precedents.  We distinguish this case from the decisions in Committee to Elect Ron Carey, P-651-IBT (August 14, 1991), aff’d, 91 EAM 183 (September 17, 1991), and Jensen, 2001 EAD 479 (September 28, 2001), aff’d, 01 EAM 93 (October 3, 2001).  In both Committee to Elect and Jensen, the campaign was ordered to disgorge all funds received because, in each case, the campaign event itself was held to violate the Rules.  Here, by contrast, we hold that the kick-off event was permissible under the Rules.  We go beyond the remedy ordered in Rushing (payment of the published price), however, and add the requirement to distribute a remedial notice similar to that ordered in Gegare, 2011 ESD 20.  Broader dissemination is ordered here than in Gegare to raise awareness of the equal access rule throughout the IBT so that union officials and campaign representatives will be able to avoid such violations now that the period for nomination and election of most of the convention delegates is about to start.  We also go beyond the monetary remedy ordered in Rushing, for two reasons.  First, the same campaign manager is involved here who was involved in Rushing, demonstrating the need for a more extensive remedy to encourage his compliance with the Rules.  In addition, we have found a second significant violation by the campaign manager here, warranting an enhanced remedy.  This second violation is his failure to recognize the need for the IBT to give advance written notice of the availability of the benefit he was pursuing for his campaign and to decline that benefit unless and until such notice was given.

ESD 63 at 11-12.

Appeal by the IBT

                        The appeal by the IBT has been resolved by agreement with the Election Supervisor to modify the remedy ordered by the Election Supervisor as it pertains to the IBT.[5]  Accordingly, the IBT’s appeal is withdrawn.

Appeal by the Hoffa Campaign

                        The Hoffa Campaign appeals ESD 63 on several grounds.  Letter from Attorney David J. Hoffa, dated December 30, 2015 (Hoffa December 30 Letter); Letter from Attorney David J. Hoffa, dated January 7, 2016 (Hoffa January 7 Letter).

First, the Hoffa Campaign argues that the Election Supervisor improperly expanded the scope of the protest, by investigating the role of the IBT in facilitating the alleged employer contribution.    

The protest itself only alleges an employer contribution (the first part).  It does not allege the second part, which was made up by the Election Supervisor on its own, expanding upon Zuckerman’s original protest into the area of equal notice and equal treatment.

The reality is that Zuckerman never asked for access to the IBT room block, never distributed flyers and never held an event.  Zuckerman never negotiated prices and fees with the hotel.  He was not treated disparately and therefore the issue of access to the IBT room block information or authorization from the IBT never affected him or his Slate.  This is likely why he did not allege lack of equal notice or availability. 

In such a vacuum (no other candidate even tried to hold an event), the Election Supervisor is essentially creating an advisory opinion, not remedying a wrong.  Since there is no actual case in controversy here, this analysis of disparate treatment and notice and any remedy related to it should be stricken from the decision and vacated.

Hoffa December 30 Letter at 2.

 Second, the Hoffa Campaign argues that “there was no employer contribution,” arguing that:

Ms. Spano’s initial quote of $1.50 per flyer appears to be merely an initial ballpark quote, without knowing how many flyers (and thus how much of the Paris front desk employee’s time would be spent handling flyers to guests checking in) Mr. Thompson was considering.  When Mr. Thompson later stated that the IBT room block was around 850 rooms and therefore around 1,000 flyers were needed, Ms. Spano ended up proposing a $500 flat fee, instead of a per-flyer price.  Presumably, Ms. Spano knows how to do her job and has people she reports to, and therefore who is Mr. Thompson but to believe her?  Indeed, who is the Election Supervisor to challenge Ms. Spano’s own quote of a flat fee?  Private vendors and campaigns have long been free to negotiate a commercial reasonable price for goods and services, and it is entirely possible that certain campaigns might negotiate a better rate than another campaign for a similar services.  But this alone does not create a “discount” that converts to an employer contribution. 

              * * *

The Election Supervisor has essentially stated that Ms. Spano’s price of $500 is “too little” when the Election Supervisor has absolutely no knowledge of whether this is too little or too much, especially when one considers the hotel exists to make money off of events, not flyers for events.  This is especially true since Zuckerman was not quoted a different price – indeed he never asked.  It makes sense to think Ms. Spano would have first offered to do the flyers for free, given that they were sure to gather more Teamsters to the Campaign Kickoff event, generating more cash-bar revenue.  Since $500 is what Paris quoted, the Hoffa Campaign paid exactly what they were supposed to.  There was no discount, and therefore, no employer contribution by Paris to the Hoffa Campaign.  

 Id. at 3.  The Hoffa Campaign also points out that “Mr. Thompson did more than anyone to encourage compliance with the Rules, from assuring Ms. Spano didn’t give the flyer distribution away for free to checking to assure that another campaign could get the same service.”  Id. n.3.

Third, the Hoffa Campaign argues that the remedy ordered by the Election Supervisor is “inappropriate, punitive, unfair and should be vacated.”  Id. at 4.  The Hoffa Campaign contends (1) that the Election Supervisor’s remedy creates a “new obligation for campaigns;” (2) that the fine is inappropriate; and (3) that “the mailing is neither appropriate nor necessary.”  Id. at 4-5.

Fourth, the Hoffa Campaign contends that the Election Supervisor not only sets a new rule for the IBT to follow, but directs the Hoffa Campaign to help enforce it.

When seeking campaign use of a union-controlled facility, the campaign is to actually tell the vendor(s): who to do business with; what to charge; and who has to provide notice to whom.  The remedy actually wants the campaign to assist the IBT in their duty, even though the campaign has no control over the vendor.  This rule is illogical and in a practical sense, unworkable, almost doomed from the start to create yet more unnecessary protests.  

Id. at 4.   The Hoffa Campaign objects to the Election Supervisor’s reliance on the Gegare decision, because “that decision dealt with equal access to local union facilities and services already subject to the Rules and the Election Supervisor.  Here, we are dealing with an outside private party, Paris, which is not controlled by the Rules or the Election Supervisor.”  Id.  The Hoffa Campaign further argues that:

 

This notice “rule” did not exist prior to this Decision as to flyer distribution to the IBT room block.  Even assuming, for the sake of argument only, that Your Honor accepts this complicated new notice obligation foisted on the IBT and campaigns, the obligation is new (circa December 28, 2015).  It makes no sense to apply the new rule, ex post facto, to the proper actions the Hoffa Campaign took in May of 2015.  

 

Id. (emphasis in original).

Fifth, the Hoffa Campaign argues that because there was no underpayment, the fine should be vacated, and that there is “no rational basis” for a triple fine because “the Hoffa Campaign is not recidivist, and there is nothing in the record to say that the Campaign would not comply in the future with the ultimate ruling.”  Id. at 5.

Finally, the Hoffa Campaign argues that the mailing is neither appropriate nor necessary because it deals with the part Mr. Zuckerman did not protest – the disparate access issue.  Moreover, the Hoffa Campaign argues that the mailing remedy is overbroad because it requires the Hoffa Campaign “to mail at its considerable expense the notice to everyone who attended the Unity Conference, even though not a single recipient attempted to rent space, to pay for flyer distribution, or was discriminated against.”   Id.

Appeal by Fred Zuckerman

                        Mr. Zuckerman supports the Election Supervisor’s findings and conclusions, but appeals the remedy imposed, which Mr. Zuckerman contends should include disgorgement of the proceeds of the kickoff event, because the event itself was arranged in violation of the Rules.  Letter from Attorney David O’Brien Suetholz, dated December 30, 2015, at 2-3. 

Position of TDU

                        TDU supports the Election Supervisor’s findings and conclusions, but suggests “a remedial scheme that takes into consideration the external legal context, both civil and criminal, and the recidivism of the various Hoffa campaigns since at least the 2000-2001 election cycle.”  Letter from Attorney Barbara Harvey, dated January 7, 2016, at 1.  Specifically, TDU proposes that in the future “all official IBT events at the Bally/Paris Hotels in Las Vegas which are scheduled at any time that bona fide insurgent candidates are campaigning against incumbent candidates for international office must be negotiated and arranged through and supervised by a representative of the Election Supervisor who reports only to the Election Supervisor and may be a member of the ES staff.”  Id.

Position of the Teamsters United Slate

                        The Teamsters United Slate supports the Election Supervisor’s findings and conclusions, but urges that the fine be increased by an unspecified amount in light of “repeated misconduct,” and to provide a greater deterrent to future misconduct, noting that “[w]ithout substantial fines, candidates may simply accept small financial penalties as a reasonable cost to pay to advance their candidacies.”  Letter from Attorney Julian Gonzalez, dated January 7, 2016, at 5.

Decision of the Election Appeals Master

Scope of Investigation

Under Article XIII, Section 4 of the Rules, the Election Supervisor is permitted to order a remedy as the result of a protest or any investigation undertaken with or without a protest.  In this case, the Hoffa Campaign was apprised that the scope of the investigation included whether the IBT granted it an impermissible benefit by approving the desk-clerk distribution.  During the investigation, the Hoffa Campaign submitted a position statement arguing that no violation had occurred, but did not challenge the authority of the Election Supervisor to investigate this issue.  OES January 7 Letter at 3-4.  Under all of these circumstances, I find that the Election Supervisor did not abuse his discretion in investigating the role of the IBT in facilitating the alleged employer contribution.

Employer Contribution

            Based upon established precedent and the specific facts and circumstances of this transaction, I find that the Election Supervisor did not abuse his discretion in finding that the fee charged by Bally’s/Paris was not commercially reasonable.  Contrary to the argument of the Hoffa Campaign that the Election Supervisor established a “new standard,” the Election Supervisor applied well-established precedent to the specific facts of this situation.  The history of the negotiation recounted above provides more than sufficient evidentiary support for the determination of the Election Supervisor.  In addition to the catering manager’s willingness to waive the fee altogether, and the eventual provision of the requested service for far less than had been charged in 2000, the upgrade to a substantially larger and more desirable conference room at no charge strongly suggests favoritism in the negotiation.

Remedy 

When the Election Supervisor determines that the Rules have been violated, he “may take whatever remedial action is deemed appropriate.”  Article XIII, Section 4.  In fashioning the appropriate remedy, the Election Supervisor views the nature and seriousness of the violation as well as its potential for interfering with the election process.  “The Election Supervisor’s discretion in fashioning an appropriate remedy is broad and is entitled to deference.”  Hailstone & Martinez, 10 EAM 7 (September 14, 2010).

In this case, the Hoffa Campaign objects to the imposition of a fine and mailing of notice of the Election Supervisor’s determination, while the protestor, the Teamsters United Slate and the TDU argue for an increased penalty.  I find that the Election Supervisor carefully considered the nature and seriousness of the violation, and correctly concluded that a fine reflecting the history of similar violations was appropriate, while at the same time rejecting disgorgement of the proceeds of the event.   Nor, based upon the history of similar violations, did the Election Supervisor abuse his discretion in directing the Hoffa Campaign to mail notice of the Election Supervisor’s determination to the conference attendees.

 

I further find that the Hoffa Campaign’s concerns with respect to the “advance written notice” requirement are, as a practical matter, largely obviated by the modified remedy with respect to the IBT.

 

Conclusion

 

For the reasons set forth above and for substantially the reasons set forth in ESD 63 and the OES January 7 Letter, the appeals by the Hoffa Campaign and Mr. Zuckerman are DENIED, the appeal by the IBT is withdrawn, and ESD 63 is AFFIRMED, as modified by the agreement as to remedy between the Election Supervisor and the IBT.[6]

SO ORDERED.

 

/s/___________________________________

KATHLEEN A. ROBERTS

ELECTION APPEALS MASTER

 

DATED:  May 16, 2016