April 2, 1996
VIA UPS OVERNIGHT
James P. Hoffa
April 2, 1996
Page 1
James P. Hoffa
2593 Hounds Chase
Troy, MI 48098
Ron Carey, General President
International Brotherhood of Teamsters
25 Louisiana Avenue, N.W.
Washington, DC 20001
John Sullivan, Associate General Counsel
International Brotherhood of Teamsters
25 Louisiana Avenue, N.W.
Washington, DC 20001
Susan Davis
Cohen, Weiss & Simon
330 W. 42nd Street
New York, NY 10036
Steven Kaplan
Krakow & Kaplan
1161 San Vincente Boulevard
Suite 1015
Los Angeles, CA 90049
James P. Hoffa
April 2, 1996
Page 1
Re: Election Office Case No. P-264-IBT-SCE
DECISION ON REMAND
Gentlepersons:
James P. Hoffa
April 2, 1996
Page 1
A pre-election protest was filed pursuant to Article XIV, Section 2(b) of the Rules for the 1995-1996 IBT International Union Election (“Rules”) by James P. Hoffa, a candidate for general president. Mr. Hoffa alleged that an attempt by the IBT to obtain a confidentiality provision in connection with its settlement of the civil litigation in High v. Int’l Bhd. of Teamsters, CV 93-3185-AWT (Sx) (C.D.Cal.), violated the Rules at Article XII, Section 1(b). In High, the plaintiff claimed that the IBT had discriminated against him on the basis of race and age, in violation of current law. Mr. Hoffa contended that the IBT’s ultimately unsuccessful effort to prevent a public disclosure of the settlement details was an improper campaign contribution because the proposed confidentiality provision supported his opponents campaign and was sought in order to prevent Mr. Hoffa from learning of it. As part of the settlement, the parties agreed that the majority of the funds would be paid out of the Teamsters Retirement and Family Protection Plan. Mr. Hoffa contended that the structure of this aspect of the settlement furthered an improper purpose to avoid legal public reporting requirements.
On January 11, 1996, the Election Officer issued a decision denying the protest in its entirety. The decision found as a fact that Mr. High’s attorney initially objected to the IBT’s insistence on “exceptionally protective confidentiality provisions” on the narrow ground that such a demand had not been raised in a timely manner and was sought only after achieving agreement in principle. A motion was made to enforce the settlement agreement without the confidentiality agreement.
At the hearing, the IBT’s local counsel, Steven Kaplan, responded to the court’s questions as to the importance of the confidentiality demand. He stated during the course of that response that the case was “very sensitive and subject to exposure” during the political campaign for general president and that the “bulk of the witnesses that Mr. High was going to be calling are political opponents of Mr. Carey.”
Despite this evidence, the Election Officer specifically determined that the settlement agreement and the attempt on the part of the IBT to obtain confidentiality in connection with it was not campaign activity within the meaning of Article XII, Section 1(b). The determination was grounded on the conclusion that it is common and within the institutional interests of employers like the IBT to “settle lawsuits of this type in order to avoid the expense and stress of trial.” The Election Officer further determined that the maintenance of confidentiality provisions in suits involving claims of race and age discrimination advanced the institutional concerns of the IBT and was motivated, not by a purpose related to the election, but “by the union’s fear of adverse publicity.”
Mr. Hoffa appealed the decision and the matter was heard before the Election Appeals Master on January 29, 1996. In his decision, In Re: Hoffa, 96 - Elec. App. - 69 (KC)
(February 1, 1996), the Election Appeals Master remanded the matter to the Election Officer to acquire the following additional facts:
[A] more focused and penetrating factual inquiry relating to the IBT’s possible political motivations in the conduct of this litigation is required. Specifically, the IBT’s counsel, Mr. Kaplan, ought to be interviewed with respect to the instructions he was given in connection with the disposition of the High litigation. Additionally, the Election Officer ought to inquire of the IBT staff counsel who participated in the authorization of the terms, demand for a confidentiality order, and the subsequent attempt to withdraw the settlement. Furthermore, as I understand the IBT’s position, the settlement terms and conditions are entirely consistent with routine, nonpolitical, legal policy. Inquiry with respect to institutional records supporting this claim is also warranted.
James P. Hoffa
April 2, 1996
Page 1
Pursuant to this order, the Election Officer interviewed Mr. Kaplan and questioned David Neigus, the IBT attorney responsible for the case. The Election Office was unsuccessful in contacting Mr. Adams, counsel for Mr. High. The Election Officer has further requested and received all documents relating to the IBT’s legal policy with respect to the settlement of discrimination actions filed against it.
This additional investigation discloses that Mr. Kaplan was engaged to represent the IBT in the High litigation in late 1994. In January 1995, Mr. Neigus authorized Mr. Kaplan to settle the matter for no more than $50,000, as part of a “global” settlement which was proposed to include a full release of all current and dismissed parties and a confidentiality provision. No substantial progress toward settlement occurred until after the week of October 23, 1995. During that week, the presiding court granted six of seven motions in limine previously filed by Mr. Kaplan. The final motion, seeking to exclude as evidence a certain racially offensive cartoon allegedly left on Mr. High’s desk, was deferred by the court until the first day of trial. Thereafter, Mr. High’s attorney made an offer which Mr. Neigus and Mr. Kaplan discussed in detail.
Mr. Neigus and Mr. Kaplan recount that two themes dominated the settlement discussions: the mechanism for settlement and confidentiality. The decision was made to explore the possibility of using the IBT pension plan as a source of compensation in order to minimize the out-of-pocket costs.
The concerns over confidentiality, Mr. Neigus claims, were evoked due to repeated efforts by counsel for Mr. High to assure the defendant of the potential damage the lawsuit could have on Mr. Carey’s election campaign. In settlement documents, Mr. Adams wrote as early as January 25, 1995:
Moreover, an adverse jury verdict against the Teamsters would be politically damaging to the current administration. As I understand it, campaigning has already begun even though the next Convention is another two years away.
Prior to the scheduled trial date of October 31, 1995, Mr. Adams prepared and submitted a witness list which included several political opponents of Mr. Carey. Among those on the list was former IBT Trustee Robert Simpson, a vigorous opponent of the Carey administration, who IBT believed had no personal knowledge of the facts of the High litigation. Additionally,
Mr. High appeared at the October 31 hearing wearing a Hoffa hat.
Mr. Neigus states, and Mr. Kaplan agrees, that he was not authorized to raise the election in his comments before the Court. Mr. Kaplan stated that he had no opportunity to discuss his testimony with Mr. Neigus prior to the hearing because he was unaware that he would be required to testify. His references to the election, Mr. Kaplan states, were motivated by his belief that there would be publicity, his knowledge of the election campaign, and the presence of the plaintiff in court that day wearing a Hoffa cap. In these circumstances, IBT counsel stated, the
James P. Hoffa
April 2, 1996
Page 1
need for a firm confidentiality provision in any settlement of the case was essential because adverse publicity had been promised.
The IBT has also presented evidence that seeking a confidentiality provision was consistent with its normal settlement procedure in similar discrimination cases. By summarizing pertinent data concerning 10 settlements with terminated professional personnel, the IBT demonstrated that, excluding the High settlement, six of the remaining nine settlement agreements contained confidentiality agreements.
The IBT provided the declaration of Michael B. Trister, a lawyer specializing in “organizations’ personnel policies and practices, including the responses to claims of discrimination brought against the organization by employees and former employees.”
Mr. Trister states that labor organizations faced with discrimination claims have an interest in keeping settlements confidential because such claims could have an impact on the ability of the union to carry out its programs or activities relating to minorities and women. The IBT attorneys in this case stated that they believed confidentiality was important in the High case because the IBT is publicly committed to organizing minority workers.
Mr. Kaplan stated that his discussions with Mr. Neigus never addressed any probable or potential harm to Mr. Carey’s reelection or his campaign. Any discussion of the election, according to Mr. Kaplan, was limited to its potential as a vehicle for embarrassment to the IBT. Mr. Neigus confirms that Mr. Kaplan’s recollections concerning their conversations are accurate.
The documents submitted during the investigation reveal that after the Court’s
October 31 ruling accepting the settlement without the confidentiality provisions, Mr. High, through his attorney, attempted to seek a significant additional compensation in exchange for a confidentiality provision. In a letter to Mr. Kaplan dated October 31, 1995, Mr. Adams writes:
Obviously, if the confidentiality provision and a Stipulation for Record Sealing is not agreed upon, the issues of Mr. High’s discrimination and Mr. Carey’s apparent intent of raiding the pension funds will remain in the public domain whose dissemination to his opponents will be outside of our respective control.
The IBT refused to enter into any negotiations with Mr. High to pay any additional money for the purpose of securing confidentiality.
Also subsequent to the hearing, Mr. High’s counsel began to question whether those provisions in the settlement concerning the use of the pension fund for most of the settlement amount were part of the agreement. This aspect of the settlement agreement was important to the IBT. The IBT presented evidence that pension credits were a routine feature of settling their employment litigation cases.
James P. Hoffa
April 2, 1996
Page 1
The IBT asserts that the efforts by Mr. High’s counsel to withdraw from that part of the settlement and the allegations concerning the use of pension fund monies in the protest before the Election Officer, led to the IBT’s filing with the Court of its “Supplement to Status Report and Memorandum Regarding Settlement of Case.” In this report, the IBT claims that by questioning the settlement “Tom High has clearly breached the covenant of good faith and fair dealing with respect to that agreement by assisting and perhaps encouraging the Hoffa campaign to undermine and attack the settlement agreement.”
The facts surrounding the settlement leads the Election Officer to the conclusion that the conduct of IBT counsel did not constitute a contribution to Mr. Carey’s campaign, in violation of the Rules.
While there is no question that Mr. Kaplan referred to the election during his appearance in court on October 31, 1995, not every mention of the election process constitutes campaigning.
As the Election Officer recently stated, “Where the IBT or an affiliate is accused of making a campaign contribution through its activities, the ‘purpose, object or foreseeable effect’ of the conduct must be examined in light of the union’s legitimate activities and functions.” Faulkner, P-293-IBT-CLE (March 25, 1996) (appeal pending). Here, the settlement of the lawsuit was, as shown by the evidence submitted, a legitimate, union-related expenditure of union funds. It would not become an improper contribution simply because a foreseeable effect of the settlement would be to not have it disclosed to the general public, and therefore, not impact on the general president’s chances of reelection. See In Re: Golubovic, 95 - Elec. App. - 49 (KC) (December 28, 1995) (“The fact that a union member . . . is a declared candidate for union office or is active in union politics does not ensure that the Election Rules will supply a remedy for every union-related matter in which that party believes he or she has been mistreated.”) To find a violation, the “foreseeable effect” of the expenditure must be more direct, as opposed to a possible or incidental byproduct.
The Election Officer has previously held that “restrictions on campaigning must not be read so broadly as to restrict the right and the responsibility of union officers to conduct their official business . . .” Martin.
The evidence here demonstrates that the actions of the IBT’s actions in this litigation were not improperly motivated by political considerations and were within the IBT’s legitimate institutional interests.
Accordingly, 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:
James P. Hoffa
April 2, 1996
Page 1
Kenneth Conboy, Esq.
Latham & Watkins
885 Third Avenue, Suite 1000
New York, NY 10022
Fax (212) 751-4864
Copies of the request for hearing must be served on the parties listed above as well as upon the Election Officer, 400 N. Capitol Street, Suite 855, Washington, DC 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
Bruce Boyens, Regional Coordinator