March 4, 1998
VIA UPS OVERNIGHT
John McCormick
March 4, 1998
Page 1
John McCormick
Teamsters Local Union 705
1645 West Jackson Blvd.
Chicago, IL 60612
James P. Hoffa
2593 Hounds Chase
Troy, MI 48908
James P. Hoffa Slate
c/o Patrick J. Szymanski, Esq.
Baptiste and Wilder
1150 Connecticut Ave., NW, Suite 500
Washington, DC 20036
United Slate Local 705
c/o Dane Passo
6811 West Roosevelt Road
Berwyn, IL 60402
Maywood Park Race Track
North at First Avenue
Maywood, IL 60153
Richard Brook, Esq.
Cohen, Weiss and Simon
330 West 42nd Street
New York, NY 10036
Bradley T. Raymond, Esq.
Finkel, Whitefield, Selik,
Raymond, Ferrara & Feldman
32300 Northwestern Highway
Suite 200
Farmington Hills, MI 48334
Joseph R. Lemersal, Esq.
Nash, Lalich & Kralovec
30 North LaSalle Street, Suite 1526
Chicago, IL 60602
John McCormick
March 4, 1998
Page 1
Re: Election Office Case No. PR-012-LU705-NCE
Decision on Remand
Gentlemen:
John McCormick
March 4, 1998
Page 1
John McCormick, a member of Local Union 705, 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”) against the Hoffa Campaign. The protester alleges that a fundraising event was organized and held for benefit of the Hoffa Campaign at the Maywood Park Race Track (“Maywood”) in Maywood, Illinois, on October 11, 1997, and violated the Rules because (1) the admission ticket contained a disclaimer which solicited contributions from nonmembers, specifically from nonmember retirees, (2) contributions were improperly solicited on work time, (3) required information about contributors was not maintained, (4) contributions were accepted from Maywood, an employer, and (5) contributions were accepted from the Local 705 - United Slate (“United Slate”), a slate of candidates for local union office, which is also funded with contributions which are improper under the Revised 1996 International Officer Rerun Election (“Rerun Plan”).
Mr. Hoffa responds that the alleged improper solicitations were for local union candidates, which are not within the Election Officer’s jurisdiction. Further, Mr. Hoffa asserts that proper records were maintained of contributors to his campaign and no improper contributions were accepted by his campaign.
On November 17, 1997, Interim Election Officer Benetta M. Mansfield issued a decision granting the protest as to an improper contribution by the United Slate for providing Mr. Hoffa with a forum to make a campaign speech. Mr. Hoffa appealed this decision to the Election Appeals Master. While the appeal was pending, on December 10, 1997, the Election Officer requested and was granted remand of the protest for reconsideration.
In a letter dated December 9, 1997, the protester questioned whether the Election Officer should reconsider whether Maywood had offered Mr. Hoffa a discount from the normal commercial rate charged for such events.
On remand, the Election Officer focused his investigation on examining an apparent discrepancy between the number of persons attending the Hoffa fundraiser and the total amount of money raised. This discrepancy resulted from the number of attendees reported to the investigator by the Hoffa campaign during the initial investigation and the number subsequently reported on Mr. Hoffa’s Campaign Contribution and Expenditure Report (“CCER”) No. 1. The Election Officer also pursued a more detailed investigation of whether the fundraiser for Mr. Hoffa was improperly subsidized by the United Slate or Maywood.
The protest was investigated by Regional Coordinator Judith E. Kuhn.
I. Findings of Fact
On Saturday, October 11, 1997, two fundraising events were held at Maywood. Both events were organized by Dane Passo, a volunteer for the Hoffa Campaign and a candidate for local union office on the United Slate. The first event was a fundraiser for the Hoffa Campaign. The admission ticket indicates that the hours of the event were between 3:30 p.m. and 5:30 p.m. and that the price of admission was $100. The ticket contained the following disclaimer:
John McCormick
March 4, 1998
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Only I.B.T. members or persons who are not employers may contribute to my campaign. Employers, union [sic], charitable organizations, trusts, foundations or other similar entities may not contribute any money, goods, services or facilities to my campaign.
Despite language on the ticket which reads “Present for your dinner,” there was no dinner included with the $100 ticket for the Hoffa fundraiser. Maywood permitted free guest admission to its club house and arranged a cocktail reception for the Hoffa Campaign event. Maywood Marketing Manager Trayce Zimmerman advises that the Hoffa fundraiser received an open bar, bar drinks only, from 3:30 p.m. to 5:30 p.m. for no more than 100 people. Additionally, Maywood named a race “in honor” of the Hoffa campaign organization, a race was also named “in honor” of a Hoffa Slate Central Region vice-president and candidate. The Hoffa fundraiser was charged $300 for the reception, and paid for it with a check drawn on the Hoffa Rerun checking account.
Mr. Hoffa paid his own travel expenses to and from the event. Maywood based its price on fewer than 100 people, but Ms. Zimmerman does not know how many attended the fundraiser. According to the CCER filed by Mr. Hoffa, 191 people attended the fundraiser and 171 of those persons made contributions in some form, either purchasing tickets at $100 per person, making direct contributions or purchasing paraphernalia.
A second fundraising event, organized for the benefit of the United Slate, was scheduled for after 6:00 p.m. The services rendered by Maywood for this event were paid for by the United Slate. The United Slate supports the candidacy of Dane Passo and a slate of other candidates for local union office. The price of admission, according to the face of the ticket, was $20. The admission ticket promised dinner and “an evening of boxing and betting,” including several live boxing matches.
Maywood stated that about 1,100 people attended the United Slate fundraiser. Mr. Hoffa spoke to those who attended the United Slate fundraiser and admits that, in addition to making statements which supported the candidacy of Mr. Passo and other candidates on the United Slate, he made remarks supporting his own candidacy. An America Online message advertising the United Slate fundraiser noted that Mr. Hoffa would be a “special guest” at the event. Maywood also arranged dinner, official racing programs, and special reserved seating to observe the races.
John McCormick
March 4, 1998
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The United Slate party on October 11, 1997, was priced based on Maywood’s standard “Sulky Club Dinner Package.” Their standard price for this package ($9.95 per person, 75 people minimum) includes free admission and programs, an honorary race, a VIP photo, and a buffet dinner. According to Maywood, additional races were named “in honor” of United Slate candidates for this event because the attendance level made it a large event. On the night the fundraisers were held, the fourth, fifth, sixth, seventh, eighth, and ninth races were named as follows:
The Hoffa Now Race - Dane Passo United Slate Local 705 - The Bill Hogan Race - The Frank Wsol Slate - Pat Flynn, Vice President I.B.T - The Tony Fiore Race - Local 726
The United Slate fundraiser cost $10,945. Maywood received a check for that amount from the United Slate.
During the remand investigation, the investigator thoroughly reviewed the Maywood records for these and other, similar events. The promotional materials for Maywood do not offer an event package that features an open bar at approximately $3 (three dollars) per person. Ms. Zimmerman did provide documentation demonstrating that Maywood frequently stages parties with free hors d’oeuvres, as a marketing tool. Ms. Zimmerman stated that free cocktails are also provided at these parties. The size of these parties varies and can be for as few as 25 people. Maywood’s promotional materials offer a $30 per person package price for a 3.5 hour beer and wine reception. That package includes a sandwich, pizza and nacho buffet, free admission and programs, an honorary race, and a VIP photo. Maywood also offers a cocktail reception with a bar at which drinks can be ordered at various prices, with “house brands” at $2.75 per drink and soda at $1.50 per drink. The cocktail reception does not appear to offer an honorary race.
During the evening of October 11, campaign paraphernalia supporting Mr. Hoffa and United Slate candidates was sold from common tables. These tables were provided to both party sponsors as part of Maywood’s commercial customer service. Although paraphernalia for the Hoffa Campaign and for the United Slate was sold from the same area, separate records of the amounts collected for the sale of Hoffa Campaign paraphernalia were kept. Records maintained by the United Slate, the Hoffa Campaign and supporting testimony establish that the campaign paraphernalia supporting Mr. Hoffa was sold only to IBT members.
John McCormick
March 4, 1998
Page 1
In support of the allegations concerning the improper solicitation of contributions, the protester presented Bob Chocolate, an employee of the Central States Welfare Fund (“Fund”) and a member of Local Union 743. Mr. Chocolate stated that he was approached by a Fund employee, Rick Delgado, who asked him to purchase tickets on behalf of two IBT retirees. Two tickets were ultimately purchased by Mr. Chocolate for an October 11 fundraiser from Karen Tumillo and Kathy Hoyos, also employees of the Fund. According to Mr. Chocolate, he was solicited by Ms. Tumillo and Ms. Hoyos on work time and was told these tickets would admit the holders to the Hoffa fundraiser. Mr. Chocolate further states that Ms. Tumillo and Ms. Hoyos were aware that he was purchasing the tickets for two nonmember retirees. The tickets purchased by Mr. Chocolate were sold at the price of $20 each and were valid for admission to the United Slate event only.
II. Improper Disclaimer
The protester’s first claim is that the Hoffa Campaign violated Article V, Section A.1 of the Rerun Plan by utilizing a ticket to the fundraising event which did not contain the appropriate disclaimer. Article V, Section A.1 of the Rerun Plan states:
No candidate, slate of candidates or independent committee, nor anyone on their behalf, may solicit or accept financial support, or any other direct or indirect support of any kind, from any nonmember. Nonmembers include any former member of the IBT (including retirees). Nonmembers do not include a member’s immediate family defined as the member’s spouse, parents, children, sister(s) and brother(s).
The protester asserts that the ticket to the Hoffa fundraiser violates this provision because it solicits contributions “from persons who are not employers,” regardless of whether or not they are members.
Under Article XII, Section 1(b)(9) of the Rules, candidates are strictly liable to ensure that the source of each contribution received is proper. Throughout the election period, the Election Officer has strongly advised that candidates utilize a disclaimer on all literature and advertising seeking to raise funds or to promote fundraising events. The Advisory on Campaign Contributions and Disclosure (“Advisory”) as revised November 1997 suggests that the following disclaimer be used:
ATTENTION: Under the Election Rules, the campaign may accept contributions only from active IBT members. IBT members who are also employers may only make contributions from their personal funds. No member may contribute more than $1,000 in total for use in the rerun election.
John McCormick
March 4, 1998
Page 1
The Hoffa Campaign admits that the disclaimer displayed on the tickets to the October 11 fundraiser does not comport with Article V, Section A.1. Under the Rules and the Advisory, however, the use of a disclaimer is purely voluntary. A candidate using an inaccurate or incomplete disclaimer which invites improper or ineligible persons or entities to make campaign contributions does so at his or her own peril. However, such activity does not, by itself, constitute a violation of the Rules or the Rerun Plan. An allegation of a Rules or Rerun Plan violation is sustainable only if items of literature or promotional material containing an inaccurate disclaimer are sent to persons or entities who are not IBT members or some other evidence exists showing that improper contributions have been made. Carey, PR-022-RCS-NYC (November 3, 1997).
Here, the improper disclaimer is the sole basis for the assertion that nonmembers or retirees contributed to the Hoffa Campaign by purchasing a ticket to the fundraising event. No witnesses or other evidence were produced in support of this contention. The Hoffa Campaign has presented an enumerated list showing that all persons attending the fundraiser or contributing directly to the campaign at the Maywood event were active IBT members.
III. Solicitations
The protester asserts that improper solicitations for contributions to the Hoffa Campaign were made by Ms. Tumillo and Ms. Hoyos in violation of the Rules at Article XII, Section 1(b)(4), which prohibits campaigning during time that is paid for by an employer.
The protester’s contention that Mr. Chocolate was solicited to contribute to the Hoffa Campaign is based solely on Mr. Chocolate’s statement that he was told “the fundraiser was for Jimmy Hoffa’s campaign.” The tickets which Mr. Chocolate bought, however, were sold for the price of $20 each, indicating that they were for the United Slate event, not the Hoffa fundraiser. The United Slate fundraiser supported candidates for local union office and not for the International election. The Rules do not apply to local union elections. Ryan, P-1149-LU150-CSF (November 21, 1996). See also Rules, Preamble.
The protester further asserts that Ms. Tumillo and Ms. Hoyos acted in violation of the Rerun Plan at Article V, Section 1.A by indirectly accepting contributions from nonmember retirees and by failing to comply with the record keeping requirements. The purchase of fundraising tickets by Mr. Chocolate, the allegations that contributions were improperly solicited, and allegations regarding the failure to maintain proper records all relate to a local union officer election and are beyond the Election Officer’s jurisdiction.
IV. Contributions to the Hoffa Campaign
A. By Maywood
The protester contends that Maywood made an improper contribution to the Hoffa campaign by providing services to the fundraiser at less than the normal commercial rate.
The Advisory states the following regarding the commercial reasonableness of discounts:
John McCormick
March 4, 1998
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The purchase of goods or services by an IBT member from a vendor does not constitute a campaign contribution by the vendor if the terms of the purchase are commercially reasonable. In situations where there is more than one producer of an item, the commercially reasonable price is set by the market for that item. The determination of whether the terms of sale are commercially reasonable will also depend on whether the vendor offers similar terms to other purchasers of his product.
Ms. Zimmerman admits Maywood only charged the Hoffa fundraiser $300 for use of the room and essentially provided free cocktails to the Hoffa fundraiser. Ms. Zimmerman states that it often provides cocktail parties with an open bar, at no cost to participants, as a marketing strategy. Maywood views this practice as good business, because Maywood estimates that once people are inside the track, they typically spend $100 or more on bets of which Maywood receives a seven percent cut. When asked to provide an example of a comparable event, however, Ms. Zimmerman cited a union function for another union which included a cocktail party and dinner, where Maywood provided a complimentary cocktail party, but the customer paid the per person dinner price. The Election Officer finds that Maywood may have offered this reduced package to the Hoffa fundraiser based upon the business Dane Passo and the United Slate were bringing to Maywood on the same night. Regardless of the potential marketing benefits of this approach, the Election Officer finds that the price charged for the Hoffa fundraiser is not commercially reasonable and therefore constitutes an improper contribution by an employer. The provision of free alcohol over a period of two hours to a party of 191 people is worth considerably more than $300. Based upon the number present and estimating one drink and one soda per person, the Election Officer finds that the Hoffa Campaign should reasonably have been charged $811.75 for the event. As to the honorary races, Ms. Zimmerman credibly stated that any party over 75 people is offered a race in their name. Therefore, since 191 people attended the event, the Election Officer finds that the races do not constitute an additional improper contribution.
B. The United Slate
The protester contends that the United Slate contributed to the Hoffa Campaign by (1) permitting the sale of Hoffa campaign paraphernalia at tables set up for the United Slate; (2) permitting Mr. Hoffa to make a campaign address to the guests of the United Slate fundraiser and (3) publicizing Mr. Hoffa’s presence at the United Slate event. Additionally, the protester asserts that these contributions were improper because, as a group of IBT members supporting local union candidates, the United Slate is permitted to be funded with monies which are now prohibited to International campaigns under the Rerun Plan.
John McCormick
March 4, 1998
Page 1
The Rules define “campaign contributions” to include “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 the election of a candidate.” Rules, Definitions, 5. As stated in the Advisory, such contributions can include any goods, compensated services or any material things of value. The Election Officer has very strictly construed the phrase “any . . . other thing of value” in interpreting the Rules relating to improper campaign contributions. McNamara, P-876-LU107-PNJ (September 18, 1996), aff’d, 96 - Elec. App. - 241 (September 30, 1996).
The United Slate did not make a campaign contribution to the Hoffa Campaign by permitting the sale of Hoffa campaign paraphernalia from its table. Maywood included the service of providing a sales area in its standard per person price to both campaign organizations. Moreover, separate records were kept of all sales made on behalf of the Hoffa Campaign.
However, the Election Officer concludes that the United Slate made a contribution to the Hoffa Campaign by permitting Mr. Hoffa to speak in support of his candidacy. Mr. Hoffa contends that his conduct does not implicate the Rules because the Rules do not prevent him or any other candidate from exercising the right as an IBT member to attend a campaign event in support of candidates running for local union office. In the initial election, prior to the adoption of the Rerun Plan, such appearances were proper, except when sponsored by union resources. Zero, P-078-LU337-EOH (August 4, 1995) (appearance before a group of members to support candidates for local union offices does not violate the Rules unless union resources are used).
Under the Rerun Plan, Mr. Hoffa, or any other candidate, may still attend a rally to support local union candidates. However, on October 11, 1997, Mr. Hoffa did not merely appear at the United Slate rally and make a speech supporting candidates for local union office. He also made campaign statements in support of his own candidacy. By doing so, Mr. Hoffa converted his appearance into an activity which must be reviewed for compliance with the Rules and the Rerun Plan. Thus, the Election Officer must determine whether or not the United Slate campaign contribution is a proper one.
Prior to the adoption of the Rerun Plan, distinctions between fundraising events held by groups of IBT members supporting only local union candidates and those fundraising events covered by the Rules were unnecessary for purposes of determining the propriety of contributions. The Rules generally permitted nonmembers as well as members to make contributions to election campaigns, so long as no nonmember contributions were accepted from an employer.
However, under the Rerun Plan, contributions from nonmembers are prohibited, regardless of whether the nonmember is considered an employer. Caucuses, groups or organizations of IBT members supported at least in part by such funds are now prohibited from making campaign contributions to International officer campaigns, unless the conventions are observed which guarantee proper funding. The requirements are the same as those currently contained in the Rules at Article XII, Section 1(b)(5) and the Advisory. The Rules provide as follows at Article XII, Section 1(b)(5):
John McCormick
March 4, 1998
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[N]othing herein shall prohibit any candidate from accepting contributions made by any caucus or group of Union members or any campaign organization of any candidate or prohibit such caucus, group or organization from making such contributions, provided that such caucus, group or campaign organization is itself financed exclusively from contributions permitted under the Rules.
The Advisory provides as follows at page 20:
If a caucus of union members receives contributions or funding from sources prohibited under the Rules, such as foundations or labor organizations, the caucus can still make campaign contributions if: (1) the caucus properly allocates and segregates resources obtained from prohibited sources from those received from permissible sources under the Rerun Plan; and (2) uses only the resources obtained from permissible sources under the Rerun Plan for campaigning activities.
See also In re: Gully, 91 - Elec. App. - 158 (SA) (June 12, 1991), affirming Sargent, P-249-LU283-MGN (May 21, 1991).
Thus, in the rerun election, any “caucus, group or organization” within the meaning of Article XII, Section 1(b)(5), making contributions to a campaign covered by the Rules, must itself comply with the requirements stated in the Election Officer’s Advisory and In Re: Gully if it obtains funds from any prohibited source, including nonemployer nonmembers.
The United Slate has failed to provide the Election Officer with any evidence that it segregates permissible funds from nonpermissible funds as required by the Advisory and the Rules. The transaction between Ms. Tumillo, Ms. Hoyos, and Mr. Chocolate indicate that the United Slate does not keep the type of records required by the Rerun Plan. The Election Officer therefore concludes that the United Slate violated the Rules when it permitted Mr. Hoffa to address its guests in support of his own campaign.
The protester’s remaining allegations concerning improper contributions are without merit. No violation of the Rules occurred when the United Slate advertised Mr. Hoffa’s appearance over the Internet. No mention of his candidacy was made. Rather, Mr. Hoffa was referred to as a “special guest.”
John McCormick
March 4, 1998
Page 1
In support of his contention that the fundraisers organized by the Hoffa Campaign and the United Slate were not separate events but was instead a single “thinly-veiled Hoffa rall[y],” the protester submits the two admission tickets, which are similar in certain respects, and asserts that United Slate tickets were advertised as admission to the fundraiser for Mr. Hoffa. The protester also contends that “Mr. Hoffa was apparently the dominant figure” at the United Slate event. This evidence is insufficient to show that the two events were tied together. Furthermore, Maywood’s records show that the events were separate. They were held in different locations at the Maywood facility, at different times, and differed in size by at least one order of magnitude. Finally, there is no evidence that the United Slate contributed any money to the Hoffa Campaign in connection with the Maywood event.
For the aforesaid reasons, the protest is GRANTED with respect to the improper contribution by Maywood to the Hoffa Campaign, and with respect to the improper contribution by the United Slate to Mr. Hoffa’s campaign due to his speech; but is DENIED in all other respects.
When the Election Officer determines that the Rules have been violated, he “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 is aware that the Rerun Plan represents a substantial change from the manner in which campaigning was financed in the initial election. Nevertheless, as a remedy, the Election Officer directs that Mr. Hoffa and the Hoffa campaign to do the following:
1. Cease and desist from accepting contributions in violation of the Rerun Plan.
2. Within three (3) days of this decision, the Hoffa Campaign will reimburse Maywood the amount of $530.88 for the October 11 event. This amount was determined by multiplying the rate of $4.25 per person by the 191 people that the Hoffa Campaign concedes attended the event, subtracting the $300 already paid to Maywood, and adding on interest at the prime rate in the amount of $19.13. The interest was computed at an annual rate of 8.839 percent for the five-month period in question. Within one (1) day of making the payment to Maywood, the Hoffa Campaign shall submit an affidavit to the Election Officer verifying compliance.
3. In the initial decision, the United Slate was ordered to provide simultaneously to the Election Officer and to the Hoffa Campaign, the gross amount collected from ticket proceeds collected at its fundraiser of October 11, 1997; the best estimate of the length of time, in minutes, of Mr. Hoffa’s speech at the United Slate fundraiser, and the amount of time for the total fundraiser. Thereafter, the Hoffa Campaign was ordered to reimburse the United Slate an amount based on the following calculation: total amount collected multiplied by the fraction resulting from the number of minutes Mr. Hoffa spoke when divided by the total time of the fundraiser. By an affidavit received by the Election Officer on December 1, 1997, Mr. Hoffa demonstrated his compliance with the order. Therefore, no further order is necessary.
John McCormick
March 4, 1998
Page 1
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 (1) 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, 444 North Capitol Street, NW, Suite 445, Washington, DC 20001, Facsimile (202) 624-3525. A copy of the protest must accompany the request for a hearing.
Sincerely
Michael G. Cherkasky
Election Officer
MGC:chh
cc: Kenneth Conboy, Election Appeals Master
Judith E. Kuhn, Regional Coordinator