Protest Decisions

January 22, 1996

VIA UPS OVERNIGHT

Teamsters Local Union 745

January 22, 1996

Page 1

Executive Board

Teamsters Local Union 745

1007 Jonelle Street

Dallas, TX 75217

Ron Carey, General President

International Brotherhood of Teamsters

25 Louisiana Ave., N.W.

Washington, D.C.  20001

John Sullivan, Associate General Counsel

International Brotherhood of Teamsters

25 Louisiana Avenue, N.W.

Washington, D.C.  20001

Susan Davis

Cohen, Weiss & Simon

330 W. 42nd Street

New York, NY 10036

James Hicks

Hicks and Associates, PC

1420 W. Mockingbird Lane

Suite 760

Dallas, TX 75247

Teamsters Local Union 745

January 22, 1996

Page 1

Re:  Election Officer Case No. P-247-IBT-SCE[1]

Gentlepersons:

A pre-election protest was filed pursuant to Article XIV, Section 2 (b) of the Rules for the 1995-1996 International Union Delegate and Officer Election (“Rules”) by Local

Union 745.  

Teamsters Local Union 745

January 22, 1996

Page 1

I.  The Protest

The focus of this protest is the preparation and distribution of a formal constitutional determination by General President Ron Carey on November 17, 1995.  The question addressed in that determination was whether the IBT Constitution permits the transfer of certain monies from Local Union 745, Local Union 391 and Joint Council 41 to their respective legal counsel  “in order to provide funds to challenge any potential attempt by the IBT to place the Locals or Joint Council in trusteeship.”   Referenced as a “Constitutional Interpretation Regarding Transfers of Funds to Legal Counsel (“Interpretation”), the decision concludes that the transfers violate the IBT constitution and directs the return to the respective unions “all monies transferred to legal counsel.”             

Local Union 745 specifically alleges that the Interpretation was issued in retaliation for its “outspoken opposition to the actions and policies of the IBT and Carey” and the candidacy of T. C. Stone for International office.[2]  In addition to Article VIII, Section 11(f), the protester alleges a violation of Article VIII, Section 11(a) covering the rights of members to participate in campaign activities.   Local Union 745 further contends that Mr. Carey has campaigned on union time in connection with the preparation and issuance of the Interpretation and a related press release, in breach of Article VIII, Section 11(b).  The protest further relies on Article XIII of the Rules in support of free-speech claims, which incorporate relevant provisions of the Labor-Management Reporting and Disclosure Act of 1959, as amended (“LMRDA”).

The protest was investigated by Regional Coordinator Bruce Boyens.

II.  Findings of Fact

Mr. Stone’s opposition to the actions and policies of Mr. Carey and his administration has been long-standing and vigorous.  See Jacob, P-060-LU745-EOH (July 21, 1995) and Sullivan, P-084-LU745-SCE (June 30, 1995).    In addition to Local Union 745, a transfer of funds made by Local Union 391 and Joint Council 41 were also analyzed and made subject to the Interpre-tation.  The former secretary-treasurer of Local Union 391, R. V. Durham, opposed Mr. Carey in the 1991 election and is also considered to be an opponent of Mr. Carey and his administration.  The most current evidence of this opposition is the recent filing of internal union charges by Mr. Durham against Mr. Carey.  The charges consist of six counts, including the misuse of union funds, the failure to call a special convention to address a financial crisis, ordering an illegal strike against UPS, attempting to revoke the charters of the area conferences, hiring an inflated work force and taking money from service providers and employers.  Further evidence of the opposition of Mr. Durham to Mr. Carey and his administration is demonstrated by the fact that, in February of 1994, Mr. Stone and Mr. Durham became plaintiffs in a lawsuit charging Mr. Carey and the IBT with interfering with their right to a “meaningful vote” in a referendum conducted by the IBT on the question of a dues increase.  Durham, et al. v. Ronald Carey and IBT, No. 94-0216 (D.D.C. 1994).  Mr. Darrow, who retired as the secretary-treasurer of Local Union 348 and the president of Joint Council 41 on October 27, 1995, has also been a consistent and vocal critic of Mr. Carey and his policies.  See, e.g., the complaint in Darrow v. IBT, No. 94 Civ. 2113 (D.D.C.), filed September 30, 1994.

Teamsters Local Union 745

January 22, 1996

Page 1

In approximately February of 1995, the IBT, various joint councils and a number of local unions received a document by fax which stated as follows:

TEAMSTER ALERT!!!

Ron Carey’s Secret List to

Trustee Joint Councils and

Local Union Exposed!

A group of Teamster members have obtained a confidential memo from IBT General President Ron Carey to General Counsel Judy Scott listing over two dozen Joint Councils and numerous local unions that are to be “immediately trusteed” for alleged violations of the IBT Constitution. 

This secret “hit list” targets those locals and joint councils opposed to the policies of Ron Carey that have weakened our union and left us in financial bankruptcy.  Many of these locals have demanded a Congressional investigation into Ron Carey’s ties to organized crime.

Carey and Scott plan to carry out this illegal takeover despite knowledge that all of the activities of these locals and joint councils, including lobbying their elected representatives, is protected by the IBT Constitution and Title I of the LMRDA.

All Local Unions and Joint Councils must now go on “FULL ALERT” to protect our union from the Carey/Scott illegal takeover.  Their goal is to eliminate the dissidents from the union so that the unpopular Carey can be re-elected without opposition.

Contact your Congressman and Senators and demand they investigate.  Call the IRB at 800-225-5472 and ask them why they are allowing Ron Carey to threaten and intimidate his opponents.  But most importantly, alert your members and stewards that their union is under attack.

OUR UNION’S FUTURE DEPENDS ON YOUR ACTIONS

PLEASE DISTRIBUTE AND POST

(Emphasis in original.)

Teamsters Local Union 745

January 22, 1996

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The protester was not able to identify the person or persons responsible for the creation and distribution of this memo and the investigation failed to disclose this information.  The IBT was not sent a copy of the “hit list” and requested it from the protester, among others.  It was not produced.   

On March 2, 1995, the Executive Board of Local Union 745 adopted a resolution directing the deposit of up to $750,000 into the trust account of its attorneys for the “purpose of defending against any efforts by the International Union to place Teamsters Local 745 in trusteeship or to defend against any other adverse actions taken by the International Union.”   The lesser sum of $250,000 was ultimately transferred by Local Union 745, pursuant to an “Advance Payment Agreement” with its attorneys executed on March 28, 1995.  The agreement lists the legal services to be provided in the event of an attempt “to impose any improper trusteeship” and further provides for its termination at the final conclusion of trusteeship proceedings or by voluntary action of the members of the “current Executive Board.”  The legal services to be provided include defending against any “attempts to interfere with the advance payment made” under the agreement.  Soon after and pursuant to similar advance payment agreements, Joint Council 41 transferred $50,000 and Local Union 391 transferred $100,000 to the respective trust accounts of their attorneys.

The IBT learned of these transfers and, a short time later, initiated an investigation under the auspices of its Ethical Practices Committee (“EPC”).  On March 15, 1995, a letter was sent to Local Union 745 by the EPC administrator seeking general information about the transfer of funds, including an explanation of the purpose of the transfer, all information provided to the members regarding it, copies of the video tapes of the meeting at which the resolution was approved, the amount transferred, and all other pertinent documentation.  The IBT acknowledged Local Union 745’s compliance with this request by letter of April 3, 1995.

The United States Attorney and the IRB were then preliminarily contacted by the IBT for an informal decision on how to proceed.  Protester Darrow and others also met with the IRB. Neither the U.S. Attorney’s office or the IRB took any action at the time.  The IBT then sought an opinion from attorneys outside the union concerning the propriety of holding funds in these escrow-like accounts for this purpose.  The legal opinion was received by the IBT in late May.  The matter was reviewed by the IBT’s legal staff for the next two months.  On August 2, 1995, the IBT made formal contact with the United States Attorney and the IRB to provide them another opportunity to consider taking appropriate action.  After allowing time for further evaluation by the IRB and the United States Attorney, the IBT did not receive any indication that either office intended to take action.  Therefore, Mr. Carey issued the Interpretation on November 17.

Prior to the issuance of the Interpretation, Joint Council 41's advance payment agreement was reviewed at their Executive Board meeting of September 25, 1995.  The Executive Board unanimously voted to terminate the agreement.  The funds were returned several days later.   Local Union 391 has similarly retrieved the funds it transferred to its attorney.

Teamsters Local Union 745

January 22, 1996

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On October 6, 1995, Protester Stone announced his candidacy for International vice president in the pending election.

Mr. Carey’s Interpretation concluded that the actions of Local Union 745, Joint

Council 41 and Local Union 391, with respect to the transferred funds, violated several sections of the IBT Constitution.  The executive boards of these organizations breached their fiduciary duty, he decided, because the trust accounts were the “equivalent of private defense funds” maintained to advance the interests of the incumbent officers, in violation of Article XIX, Section 7(b)(3).  He further reasoned that Article XXI, Section 2(b) was breached because the executive boards had no authority “to bind the Local to services to be rendered beyond the term of the Executive Board.”  The Interpretation notes that when a trusteeship is imposed, the trustee has the power to remove incumbents from office and extend control well beyond the terms of the current officers.  Article XXII, Section 2(b) was violated, according to Mr. Carey’s Interpretation, when the advance payment agreements made payments available for use “during a period when the Executive Board may no longer have the authority to control the affairs of the Local.”  Citing the loss of local union control over the transferred funds and the fact that the advance payment agreements had no “specific duration,”  Mr. Carey quoted Article VI, Section 4(b), which provides that bylaws may not be adopted which impair the ability of local unions to “meet their financial obligations to the International Union and its subordinate bodies or interfere with the discharge of their obligations to their members . . . in conducting the affairs of the Local Union as a solvent organization.”  The Interpretation concluded by stating that the actions surrounding the transactions constitutes “conduct bringing reproach upon the union,” in violation of Article II, Section 2(a).

On the same day that the Interpretation was made available, the IBT released a press announcement.  It contained the following headline:

“Carey Orders Union Officials To Return $400,000 Stashed

With Law Firms In Case Of Future Corruption Charges”

The press release reports on Mr. Carey’s action, equating the imposition of a trusteeship with a fight against corruption.  The notice further provides:

Teamsters President Ron Carey has ordered officials of two local unions and one joint council to return to their union treasuries $400,000 in members’ dues money that they stashed with law firms to use in case of future actions by the International Union against corruption in those affiliates.

- Cleveland Joint Council 41 gave $50,000 from its treasury to a law firm to hold.

- Local 745 in Dallas stashed $250,000 with its law firm.

Teamsters Local Union 745

January 22, 1996

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- Local 391 in Greensboro, North Carolina did the same with $100,000 in dues.

Under the Teamsters Constitution, the international union can establish a temporary trusteeship for any local or joint council to correct corruption, mismanagement, or other problems.  When that happens, the local union or joint council officials are suspended while the international temporarily administers the affiliate’s affairs, including its finances, until the new officers are elected.

But under the advance payment scheme, those suspended officers would maintain control over a large pot of members’ dues money.

“No union official has the right to undermine our fight against corruption,” Carey said.

Since taking office in 1992 as the first Teamsters president directly elected by the membership, Carey has established more than 50 temporary trusteeships because of Mob influence, embezzlement, or other problems.

Any preparation by Local 745, Local 391, or Joint Council 41 for a trusteeship was based on hypothetical concerns of theirs, since no trusteeship action has been taken or planned involving those three affiliates.

III.  Local 745’s Position

Local Union 745 takes several positions in support of its contention that the preparation and distribution of the Interpretation violates the Rules.  First, with respect to its claim of retaliation, it points to the timing of the events.  Local Union 745’s response to the EPC’s inquiry was confirmed in early April.  The Interpretation was issued some eight months later, several weeks after Mr. Stone announced his candidacy and his support for Mr. Hoffa.  Significance is attached to the apparent fact that Mr. Carey assumed jurisdiction from the EPC and the fact that Local Union 745 was never invited to submit its position.  According to Local Union 745, the issuance of the Interpretation and the upcoming election are connected.  The reference by the Interpretation to a violation of Article II, Section 2(a) of the IBT Constitution for “conduct bringing reproach upon the union” is a finding upon which internal charges could be based, and potentially affect Mr. Stone’s eligibility for office.  The Interpretation specifically applies to a joint council and a local union to which opponents Mr. Darrow and Mr. Durham are intimately joined.  Plus, although Local Union 745 does not “expect” the Election Officer to “overrule” the Interpretation, it is just plain wrong in its view.  The incorrectness of the Interpretation is additional evidence of the improper motivation behind its preparation, according to Local

Union 745.

Teamsters Local Union 745

January 22, 1996

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In support of its contention that the IBT violated Article VIII, Section 11(b), Local

Union 745 asserts that the press release, financed as it was with union funds, was worded in a way to support Mr. Carey’s bid for re-election, in violation of the Rules.  The free-speech claims are based on the theory that the Interpretation was designed to silence Mr. Carey’s critics and disqualify potential opponents from eligibility to seek nomination or election.

IV.  The Election Officer’s Conclusions

A.  Retaliation and Free Speech

The Rules, at Article VIII, Section 11(f), prohibit “[R]etaliation or threat of retaliation by the International Union, any subordinate body, any member of the IBT, any employer or other person or entity against a Union member, officer or employee” when directed toward the exercise of any election-related right.  See Parisi, Case No. P-1095-LU294-PGH (December 2, 1991).  A protest claiming retaliation cannot be sustained unless a threat or an actual act of retaliation is established.  Giacumbo, P-100-IBT-PNJ (October 13, 1995), aff’d, 95 - Elec. App. - 27 (KC) (October 25, 1995).

To demonstrate retaliation, a protester must show that conduct protected by the Rules was a motivating factor in the decision or the conduct in dispute.  The Election Officer will not find retaliation if she concludes that the union officer or entity would have taken the same action even in the absence of the protected conduct.  See Gilmartin, et al., P-032-LU245-PNJ, et seq. (January 5, 1996), Leal, P-051-IBT-CSF (October 3, 1995), aff’d 95 - Elec. App. - 30 (KC) (October 30, 1995); Wsol, P-095-IBT-CHI (September 20, 1995), aff’d, 95 - Elec. App. - 17 (KC) (October 10, 1995).  Cf., Wright Line, 251 NLRB 1083 (1980), enforced, 662 F.2d 899

(1st Cir. 1981), cert denied, 455 U.S. 989 (1982).

Here, the IBT submits that its interpretation is based on the legitimate interest of ensuring that dues monies are not expended for private defense funds for the current officers of a local union.  In view of the terms of the retainer agreements, which could reasonably be construed as giving control over these funds only to current officers even beyond the time when those officers have authority to control the affairs of the local union, the Election Officer does not find the Interpretation to be unreasonable.

Even assuming the Constitution may be subject to other reasonable interpretations, this would not defeat the union’s claim that it acted for legitimate, institutional reasons unrelated to the IBT election.  The reasonable, good-faith interpretation of the union constitution will not be disturbed by the Election Officer.  Robbins, et al., P-013-IBT-SCE, et seq. (June 30, 1995), aff’d, 95 - Elec. App. - 3 (KC) (July 26, 1995); Lucas v. Bechtel Corp., 800 F.2d 839, 849-51 (9th Cir. 1986); Local 48 v. Carpenters, 920 F.2d 1047, 1052 (1st Cir. 1990). 

Teamsters Local Union 745

January 22, 1996

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The protester questions the IBT’s good faith pointing to the delay in the issuance of the Interpretation and that the Interpretation’s issuance is the groundwork for disciplinary charges which will bar Mr. Carey’s opponents from being eligible to run against him.  The Election Officer does not find the timing of the Interpretation to be suspect in view of the efforts of the IBT to consult with the IRB and the U.S. Attorney regarding this matter.  The heightened scrutiny given to the financial affairs of the IBT and its affiliates under the Consent Decree and the oversight given to the government and the court-created IRB makes it understandable why the IBT would seek to determine if either of these parties would act prior to taking its own action.

Nor can the claim that the Interpretation is being rendered simply as groundwork for disciplinary action to disqualify electoral opponents of Mr. Carey supply the requisite bad faith to convert the Interpretation into retaliatory action.  The fact that a lawful order of the union may become the basis for disciplinary action of a political opponent who disobeys that order has not been found to constitute retaliation.  See Yager v. Carey, C.A. No. 93-1054 (RCL) (D.D.C. November 27, 1995), at 44 (“Demanding compliance with the rules does not amount to suppression of dissent.”).  Furthermore, any claim that the Interpretation constitutes a basis for possible future disciplinary action rests on speculation as to events that have not yet occurred.

B.  Improper Campaigning

Insofar as the Election Officer has determined that there was a legitimate non-retaliatory basis for this action, the preparation and issuance of the Interpretation is not improper campaigning, that is, involving the expenditure of union funds.  Nor did these efforts constitute campaigning on time paid for by the IBT within the purview of Article VIII, Section 11(b).  Duly-elected union officials have a duty to advise the membership on issues of general concern to them.  See Blake, P-245-JC42-CLA (December 18, 1995).  (News regarding the imposition of a trusteeship is of general concern to union members). 

For the foregoing reasons, the protest is DENIED.

Any interested party not satisfied with this determination may request a hearing before the Election Appeals Master within one day of receipt of this letter.  The parties are reminded that, absent extraordinary circumstances, no party may rely upon evidence that was not presented to the Office of the Election Officer in any such appeal.  Requests for a hearing shall be made in writing and shall be served on:

Kenneth Conboy, Esq.

Latham & Watkins

885 Third Avenue, Suite 1000

New York, NY 10022

Fax (212) 751-4864

Teamsters Local Union 745

January 22, 1996

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Copies of the request for hearing must be served on the parties listed above as well as upon the Election Officer, 400 North Capitol Street, Suite 855, Washington, D.C. 20001, Facsimile (202) 624-3525.  A copy of the protest must accompany the request for a hearing.

Sincerely,

Barbara Zack Quindel

Election Officer

cc:              Kenneth Conboy, Election Appeals Master

Regional Coordinators