Protest Decisions

November 5, 1996

VIA UPS OVERNIGHT

Joe Rockstroh

6154 Old Washington Road

Elkridge, MD  21227

Sam Theodus, President

Teamsters Local Union 407

3150 Chester Avenue

Cleveland, OH  44114

James P. Hoffa

2593 Hounds Chase

Troy, MI  48098

Michael Fry

American Trucking Report

6481 Rambler Drive

Pensacola, FL  32504

Chuck Sennet

Chicago Tribune Corp.

435 N. Michigan Avenue

Chicago, IL  60611

Ron Carey Campaign

c/o Nathaniel Charny

Cohen, Weiss & Simon

330 W. 42nd Street

New York, NY 10036

Paul Alan Levy

Public Citizen Litigation Group

1600 20th Street, N.W.

Washington, DC  20009

Bradley T. Raymond

Finkel, Whitefield, Selik, Raymond,

  Ferrara & Feldman, P.C.

32300 Northwestern Highway, Suite 200

Farmington Hills, MI 48334

                            Re:  Election Office Case No. P-1003-JHC-EOH

Gentlemen:

              Joe Rockstroh, a member of Local Union 355, filed a pre-election protest pursuant to Article XIV, Section 2(b) of the Rules for the 1995-1996 IBT International Union Delegate and Officer Election (“Rules”) alleging two violations of the Rules as reflected on Campaign Contribution and Expenditure Reports (“CCERs”) filed by James P. Hoffa, a candidate for  general president, and Sam Theodus, vice president-at-large candidate for reelection.

Joe Rockstroh

November 5, 1996

Page 1

              Specifically, Mr. Rockstroh alleges that the CCERs for Messrs. Hoffa and Theodus do not show payment for an alleged “infomercial” about their candidacies, which was broadcast on American Trucking Report (“ATR”).  The protester further alleges that ATR and its owner, Michael Fry, are employers.  Thus, Mr. Rockstroh contends that if Messrs. Hoffa and Theodus did not pay for the alleged infomercial, then its donation by ATR and Mr. Fry constituted an improper employer contribution to the Hoffa and Theodus campaigns under the Rules.

              The other violation alleged in the protest concerns reporting on Mr. Hoffa’s CCERs of payment for legal services furnished by the law firm of Finkel, Whitefield, Selik, Raymond, Ferrara & Feldman, P.C.  Mr. Rockstroh contends that the amount is the equivalent of 100 hours of such services, although he alleges that the firm has worked “a far larger number of hours.”  Thus, he contends that the firm is either donating additional hours or failing to charge its normal rate, and that either alternative results in an improper campaign contribution by the firm and a failure to report the contribution by Mr. Hoffa.

              This protest was investigated by Election Office Protest Chief Benetta Mansfield and Staff Attorney Kathryn Naylor.

1.  Allegation Concerning American Trucking Report

              ATR is a television program dedicated to coverage of the trucking industry.  In its brochure, it states,

American Trucking Report programs features which highlight a different part of the overall trucking industry each week.  Program features allow manufacturers to present various products that may be used in trucking markets and also gives smaller segments of the trucking industry an avenue to present their issues to the American public.  Weekly features include industry trade shows and major trucking events.

              ATR’s host is its founder, Mr. Fry, who broadcasts under the name “Lowboy Lucas.”  Other on-air personalities include a news anchor, a consumer reporter, a field reporter, and a person to anchor weekly racing updates.  ATR is carried on cable “Superstation” WGN.  It also offers program coverage of conventions, convention display services, and a “Driver News Network” at truck stops.  ATR sells advertising on all forms of its programing.

              The ATR segment that is the subject of Mr. Rockstroh’s protest aired on August 3, 1996, at 6:30 a.m. EST.  The Election Officer’s representative has reviewed a videotape of the approximately 28-minute program.[1]  It begins with Mr. Fry in the Exhibition Hall at the IBT Convention in Philadelphia, which took place July 15 through July 19.  He states that 1,500 to 2,000 people will tour exhibits that explain all divisions of the IBT, including non-trucking crafts.  At 1:13, he previews later portions of the segment by stating that there will be an interview with Mr. Hoffa, phone numbers to call for memorabilia, and an interview with a

44-year Teamster member.  From 1:45 to 3:05, the program is a montage of images, including a truck sponsored by the Pennsylvania Conference of Teamsters, views of a Carey campaign rally, an image of someone speaking from a podium at a Hoffa campaign briefing, views of Hoffa campaign materials, the interior of the Convention Hall, and an image of U.S. Senator

Arlen Specter.

              From 3:07 to 6:30, Mr. Fry interviews Mr. Theodus.  Most of the conversation, prompted by Mr. Fry’s questions, deals with Mr. Theodus’ experience with past Teamster leaders, the deregulation of trucking under President Carter, the negative impact of deregulation on the IBT, the IBT’s subsequent support for President Reagan, reasons why a young person might want to join the union, and the importance of organizing.  At one point, Mr. Fry comments on the potential value of the Hoffa name in organizing.  Mr. Theodus’ response is to state that many people were drawn to Ron Carey during the 1990-1991 International officer election, and that larger numbers are being drawn to Mr. Hoffa in this election cycle.

              Following a commercial break, the program resumes at 9:39 from the Exhibit Hall. 

Mr. Fry reports on divisions among Convention delegates on certain issues but comments that the delegates will stand together on hardcore issues of the brotherhood and sisterhood.  At 10:15, there is a news segment on trucking industry stories unrelated to the International officer election.  Commercials follow from 12:40 through 14:50.

              Mr. Fry next reports from a “hidden compartment” or “campaign strategy place,” where he interviews Mr. Hoffa.  Mr. Fry, wearing a Hoffa campaign button, first asks how Mr. Hoffa’s campaign is going, and Mr. Hoffa responds by stating that most delegates at the Convention support him and by listing certain issues.  Mr. Hoffa then emphasizes the importance of organizing new members.  Mr. Fry comments that the union decreased under deregulation and asks what needs to be done, and Mr. Hoffa further describes the need for organizing efforts.  To Mr. Fry’s next question of why one should join the Teamsters, Mr. Hoffa responds by stating that union members get better pensions, health care, benefits, and quality of life.  At approximately 18:00, Mr. Fry gives his opinion that the challenge is to take the message to new drivers and that his organization would like to help. 

              Mr. Fry then immediately asks if there is a way for people to help Mr. Hoffa’s campaign or put something on their trucks to help push for his getting the vote.  Mr. Hoffa mentions in his response that items such as bumper sticker and key chains are available, but in most of his answer he emphasizes the importance of organizing.  While Mr. Hoffa is responding, a graphic of his name travels across the top of the screen, and the image changes to a still of Mr. Theodus standing at a podium bearing Mr. Hoffa’s name, while video effects simulate star bursts.  Then, the address of the Hoffa campaign is superimposed for several seconds.  The interview with

Mr. Hoffa concludes with Mr. Fry’s comments that Mr. Hoffa’s father always told the truth and was the hardest working person in the industry, and that Mr. Hoffa seemed to be doing the same.

              Following a commercial break from 18:55 to 21:40, the ATR segments resumes at an antique truck show in Wolcott, Iowa.  It returns to the IBT Convention at approximately 26:30, with a shot of Mr. Fry in one of the hallways where the Carey and Hoffa campaigns sold campaign material.  Mr. Fry first points to a table of Carey materials, and then he walks to a table of Hoffa materials.  There, he holds up various items, interviews a campaign worker about the type of truck he drives, and asks about the most popular campaign item, which is a campaign shirt that has sold out.  At one point, Mr. Fry comments that he has made a donation for campaign material himself.  At 27:30, Mr. Fry states that viewers interested in memorabilia may call a number that then appears on the screen.  The program closes with Mr. Fry asking the people behind him at the Hoffa table who will win the election.  They yell, “Hoffa,” and Mr. Fry states, “You heard it from them.”

              In his protest, Mr. Rockstroh summarizes his objections to ATR as follows:

It is hard to construe each of these three segments as anything other than “infomercials” for the Hoffa campaign.  The three segments are (1) the Theodus interview with campaign references and paraphernalia; (2) the Hoffa interview (with Fry wearing a Hoffa button) with the explicit endorsement of Hoffa as following his father’s legacy, the appeal for support and the broadcast of the address for donations; and (3) the paraphernalia segment with the repeated appeals for donations, showing the campaign’s phone number, and leading a campaign cheer.  As a seller of advertising space, there is nothing improper about Fry and ATR providing advertising for the Hoffa campaign, so long as Hoffa pays for it.  But our review of the most recent CCER’s shows that Hoffa has neither paid for this advertising, nor listed it as an extension of credit.  [Emphasis in original.]

              CCERs are required by Article XII, Section 2 of the Rules.  In general, campaigns must report their receipts and expenditures, except for “[c]ontributions from a single source which, in aggregate, do not exceed one hundred dollars ($100.00)” or “[e]xpenditures to a single person or entity which, in aggregate, do not exceed one hundred dollars ($100.00).”  Article XII,

Section 2(a).  Thus, the starting point in examining Mr. Rockstroh’s allegation is determining whether all or any part of ATR constituted a contribution to the Hoffa and Theodus campaigns by ATR or Mr. Fry, or called for an expenditure by the campaigns that was not made.

              The Rules define “campaign contribution” quite broadly:[2]

The term “campaign contribution” means any direct or indirect contribution of money or other thing of value where the purpose, object or foreseeable effect of that contribution is to influence, positively or negatively, the election of a candidate for . . . International Officer position.  Campaign contributions include but are not limited to:

. . .

(h)  The performance of personal services or the making available for use of space, equipment, supplies or advertisements . . .

              In applying these provisions to media communications, however, the Election Officer has recognized a broad exception for “publications intended for and disseminated to the general public,” as to which “[t]he First Amendment of the U.S. Constitution requires . . . the greatest latitude in exercising the right to communicate.”  Hoffa, P-743-IBT-SCE (May 23, 1996).  Thus, under a “media exception” to the regulation of campaign contributions, the Election Officer does not exercise jurisdiction over “newspaper or magazine articles published by entities which are not owned or whose editorial policies are not controlled by candidates or committees acting on behalf of candidates”  Pressler, P-365-LU705-CHI (February 22, 1996); Brennan, P-971-IBT (October 16, 1991); Scott, P-969-IBT (October 18, 1991).  The media exception also applies to cable and broadcast media.  See, e.g., Pressler (applying media exception to radio broadcast).

              There is no allegation on this record that ATR is “owned or [its] editorial policies . . . controlled” by Mr. Hoffa, any other International officer candidate, or any committee acting on behalf of such a candidate.  Lack of such ownership or control over a media entity normally results in the media exception being applied, ending the Election Officer’s inquiry.  See Hoffa (allegedly pro-Carey article in the Union Democracy Review); Pressler (interview with Mr. Hoffa on radio station ROCK 103.5 in Chicago); Hasegawa, P-161-LU41-MOI (October 24, 1995) (article covering Hoffa campaign in The Labor Times); Scott (article on 1991 Carey campaign in Labor Notes); Brennan (reprinting of Carey campaign material in article on 1991 election in the Detroit Free Press).

              Mr. Rockstroh argues that ATR and Mr. Fry are not “independent media,” because “[t]heir revenues are provided, we strongly suspect, by numerous suppliers of Teamster employers and perhaps by Teamster employers themselves [and because] Fry and ATR have every reason to cozy up to the union in the hope of getting help obtaining business with Teamster members and Teamster employers.”  The Election Officer declines to find, however, that the sale of advertising by a media entity bars application of the media exception or requires the Election Officer to evaluate the independence of a media entity’s editorial decisions.  That inquiry would be antithetical to affording the “greatest latitude in exercising the right to communicate” that the Election Officer accords to communications intended for and disseminated to the general public, in view of the First Amendment.

              Mr. Rockstroh also argues that the Election Officer should monitor the content of media communications, by contending that the broadcast more closely resembled “advertising” than “news.”  He contends that it was biased and one-sided and that it included “express

endorsements, appeals for funds, and information about the address and telephone number for the campaign to facilitate donations.”

              To the extent that the protester suggests that the Rules require media entities to include opposing viewpoints in the same communication, the decisions cited above show otherwise.  Legitimate media communications often have an angle.  The full story will not be found in any one communication.  Therefore, the media exception is applicable even where the entity adopts a point of view.

              Thus, the Election Officer finds that Mr. Fry’s coverage of Messrs. Hoffa and Theodus as candidates was newsworthy to Teamsters and other persons interested in the trucking industry and well within the media exception.  The fact that the coverage was friendly in tone was an editorial decision outside the scope of regulation under the Rules.  Viewers may seek balance from other communications.  The Rules did not require Mr. Fry to interview other International officer candidates or to cover every aspect of the Convention.

              With respect to Mr. Rockstroh’s objection to those parts of ATR that he characterizes as endorsing Mr. Hoffa, the Election Officer notes that commentaries and editorials are also legitimate media functions.  Furthermore, those functions are specifically enumerated in a provision of the Federal Election Campaign Act (“FECA”) that is analogous to the media exception under the Rules, which exempts from the definition of campaign expenditure “any news story, commentary, or editorial distributed through the facilities of any broadcasting station, newspaper, magazine, or other periodical publication, unless such facilities are owned or controlled by any political party, political committee, or candidate.”  2 U.S.C. § 431(9)(B)(I).  As that section recognizes, “commentary” and “editorial” are given the same exemption as “news story.”  Thus, the Election Officer does not find that the alleged “infomercial” style of ATR in question took Mr. Fry’s reporting out of the coverage of the media exception.

              The Election Officer finds that the media exception does not, however, apply to the two portions of ATR, at approximately 18:00 and 27:30, when graphic displays gave information on contributing to or buying campaign material from the Hoffa campaign.  Specifically, those graphics were:  (1) the letters spelling Mr. Hoffa’s name immediately preceding and during a graphic showing the address of the Hoffa campaign, at the point in Mr. Hoffa’s interview when he responded to Mr. Fry’s question on how viewers could help; (2) the accompanying still of

Mr. Theodus standing at a podium bearing Mr. Hoffa’s name; (3) the starburst effects superimposed on that still; (4) the graphic bearing the Hoffa campaign address information; and (5) the graphic of information shown near the end of the program when Mr. Fry was showing Hoffa campaign paraphernalia.

              The Election Officer finds that those graphic displays were added to the broadcast as promotion and, to that extent, exceeded news, commentary, or editorial functions.  As courts have construed the FECA section cited above, the test in part is “whether the press entity was acting as a press entity in making the distribution complained of.”  Reader’s Digest Ass’n v. Federal Election Comm’n, 509 F. Supp. 1210, 1215 (S.D.N.Y. 1981); Federal Election Comm’n v. Phillips Publishing, Inc., 517 F. Supp. 1308, 1313 (D.D.C. 1981).  On this record, the Election Officer finds that ATR and Mr. Fry were no longer acting as a press entity with respect to the International officer election and events at the Teamster Convention when the graphics were shown.  Thus, to the extent of the graphics, the Election Officer finds that ATR and Mr. Fry made a contribution to the Hoffa and Theodus campaigns. 

              Under the Rules, campaign contributions from employers are strictly prohibited.[3]  Furthermore, the term “employer” under the Rules is not limited to employers of Teamsters.[4]  Accordingly, International officer candidates and campaigns must pay for services that they receive from employers, or a campaign contribution violation results.

              On this point, Mr. Fry responds that ATR is not an employer, because all workers other than himself (as owner) are independent contractors.  He furnished to the Election Officer a copy of correspondence from the Internal Revenue Service (“IRS”) indicating the agreement of the IRS that ATR is not an employer.  Based on this evidence, the Election Officer finds that ATR is not an employer, under the Rules. 

              Under Article XII, Section (1)(b)(5), “[n]othing herein shall prohibit any candidate from accepting contributions made by any nonmember who is not an employer.”  Thus, the Election Officer finds that the contribution to the Hoffa and Theodus campaigns made by ATR and

Mr. Fry, discussed above, did not violate the Rules.  However, if the value of the contribution exceeded one hundred dollars ($100), the campaigns were required to report it.

              The Election Officer has examined ATR’s fee structure for advertising services.  A one-time, 30-second advertisement on ATR is priced at $1,400.  The Election Officer finds that the two portions of the program in question identified above as contributions to the Hoffa and Theodus campaigns took approximately 15 seconds.  Therefore, the Election Officer finds that the value of those portions was $700.  That amount should have been reported on the CCERs of the campaigns.  The Election Officer will assign $600 as the value to the Hoffa campaign and $100.00 as the value to the Theodus campaign.

              Accordingly, the protest is GRANTED as to the obligation of the Hoffa and Theodus campaigns to show contributions from American Trucking Report on their CCER reports.

2.  Allegations Regarding Legal Fees

              a.  Allegation that Finkel, Whitefield Charged the Hoffa Campaign a Discounted Rate

              The protester asserts that Finkel, Whitefield is affording the Hoffa campaign a discounted rate in light of insignificant payments of $14,500 to the firm during the reporting period May 21, 1996 through August 20, 1996.

              In Rockstroh, P-821-IBT-EOH (October 25, 1996) (Decision on Remand), the Election Officer addressed the issue of whether Mr. Raymond charged the Hoffa campaign a discounted rate less than the billable rates for his clientele of labor organizations.  The Election Officer found that Mr. Hoffa’s campaign has not been afforded a discounted rate since the $125 hourly rate that Mr. Raymond, the attorney who handles the account, charges the Hoffa campaign clearly falls in the middle to high end of the hourly range of $90 to $140 that Mr. Raymond bills his other labor clients. 

              b.Allegation that Finkel, Whitefield is not Billing the Hoffa Campaign for all the Time and Expenses Incurred on its Behalf

              The protester contends that the payments of $14,500 reported on the CCER for Hoffa ‘96 for the period ending August 20, 1996 represent only 100 hours of legal services, and not the “far larger number of hours” that the firm has worked on the campaign’s behalf. 

              In order to verify whether Mr. Raymond had billed the Hoffa campaign for all of the time and expenses incurred on its behalf for the period ending August 20, 1996, the Election Officer required Mr. Raymond to submit records reflecting, on a daily basis, hours of work performed for the Hoffa campaign by him and any other of the firm’s attorneys.  The Election Officer also requested copies of the billing statements sent to the Hoffa campaign from Finkel, Whitefield from May 1, 1996 through August 30, 1996. 

              Mr. Raymond submitted statements which included a breakdown by date and time of the hours he and his associates expended on the Hoffa campaign.

              In addition to reviewing the submitted documents, the investigation also included a comparison of the law firm’s reported hours with Election Office records which identified the protests and appeals in which Mr. Raymond was involved.  Based on the investigation, the Election Officer is satisfied that Finkel, Whitefield has billed the Hoffa campaign for the time and expenses incurred on the campaign’s behalf.

              The Election Officer’s investigation also confirms that Finkel, Whitefield’s billing cycle does not actually reflect the full extent of fees for the work performed during the period May 21, 1996 through August 20, 1996.  The review of the firm’s billing statements to the Hoffa campaign indicates that Finkel, Whitefield sends the campaign an invoice on the first of each month for the work performed during the previous month.  Therefore, Finkel, Whitefield’s ledger indicates that for the reporting period from May 21, 1996 through August 20, 1996, the Hoffa campaign had been billed for work performed from May 1, 1996 through July 30, 1996.  Finkel, Whitefield’s ledger report for the Hoffa account also confirms that for the reporting period ending August 20, 1996, the Hoffa campaign had an outstanding balance of $14,748.74; $2,240.68 of which was outstanding for more than 30 days and $12,508.06 of which was billed on August 1, 1996, and had been outstanding for less than 30 days.[5]

              Based upon the investigation undertaken by the Election Officer, she finds that Finkel, Whitefield has not made in-kind contributions of legal services in the form of a discounted rate or a reduction in actual time and expenses incurred on its behalf.

              Accordingly, this aspect of the protest is DENIED.

              When the Election Officer determines that the Rules have been violated, she “may take whatever remedial action is appropriate.”  Article XIV, Section 4.  In fashioning the appropriate remedy, the Election Officer views the nature and seriousness of the violation, as well as its potential for interfering with the election process.

              The Election Officer orders the Hoffa campaign to file an amended Campaign Contribution and Expenditure Report to show a contribution of $600 from American Trucking Report.

              The Election Officer orders the Theodus campaign to file an amended Campaign Contribution and Expenditure Report to show a contribution of $100 from American Trucking Report.

              An order of the Election Officer, unless otherwise stayed, takes immediate effect against a party found to be in violation of the Rules.  In Re: Lopez, 96 - Elec. App. - 73 (KC) (February 13, 1996).

              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

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