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When a Union Acts like a Big Corporation


The quiet decorum of a court room is a far cry from a union hall. But in San Francisco, it is precisely in a federal court where an extremely crucial and unprecedented debate is taking place that may fundamentally alter how much democratic control members exercise over local union chapters.

 

The 1.8 million-member Service Employees International Union (SEIU) has brought a $25 million lawsuit alleging breach of fiduciary responsibilities under both national and state laws and for violations of the SEIU constitution against 26 former elected officers, staff and organizers of their third-largest national unit, the 150,000 member United Healthcare Workers –West (UHW).

 

The 26 defendants are currently supporters of a new union, the National Union of Healthcare Workers (NUHW) which is also being sued.

 

During the first week of the trial, both sides presented opening statements and SEIU then began presenting their testimony. Early this week, plaintiffs will rest their case and the 26 defendants will get their chance in front of the nine-person jury.

 

SEIU claims the defendants “sabotaged our union, misused our dues money, and deliberately and directly harmed members.”

 

Is it unlawful for locally elected union leaders to vigorously defend their members even when in sharp conflict with the international union? This is the real issue posed. Allegations of fiduciary malfeasance only shroud widely differing concepts of union democracy. In that sense, this is fundamentally a political trial and not about misappropriation of funds.

 

It all started a few years ago when UHW expressed disagreement with the international union’s proposal to unilaterally remove 65,000 long-term healthcare workers from the local without the approval of these affected workers.

 

Opposition began to particularly fester because SEIU President Andy Stern sought to transfer these UHW members into a local headed by his close ally, Tyrone Freeman, who was widely known to be corrupt and ineffective at improving workers’ wages and benefits. Actually, Freeman is now under criminal investigation by federal authorities and has been removed from office.

 

Nonetheless, SEIU international officers ultimately pushed through their proposal by taking over the local and eliminating the opposition – the local UHW constitution was suspended and all elected officers removed.

 

It was actively opposing these actions of the international, the defendants claim, that they are guilty of and nothing more.

 

If SEIU is successful in inflicting these incredibly onerous financial damages on local union officials, it will obviously have an enormously chilling effect on future local union deliberations. A multi-million lawsuit is enough to make even the strongest local leader a little jittery about taking on their international officials.

 

Corporate Model vs Democracy

 

Countering arguments made by SEIU attorneys in their March 22 opening statement to the jury, defense counsel Dan Siegel shot back by asserting that “A local union is not the same as a corporate branch of Bank of America.”

 

He is correct. In the corporate world, headquarters dictates to the branches so that the product retains uniformity from top to bottom. Everyone toes the line and everything is the same, from the size of each burger to the amount of ketchup splattered on each bun.

 

But unions deal with people, not products or brands. Each local union affiliated with a national union also retains its own democratically-approved bylaws. Each local, as a result, is constitutionally responsible for defending the interests of its respective members who elect and pay salaries of local officers. Each local is, therefore, a distinct unit of the larger national organization, much like states operate within a federal structure.

 

“This is a case unique in U.S. history,” Siegel told me in an interview. “An international union brought a lawsuit against union activists based upon actions they took as elected leaders of their local.”

 

Defendants openly acknowledge that the UHW 100-member executive board did in fact vote, often unanimously, to devote local resources against threats by the International union to shift long-term healthcare workers out of their local.

 

Later, as the dispute escalated, the fight melded into opposing attempts by the international union to impose the trusteeship or direct control over the local.

 

SEIU Loses Ground

 

However, in a stunning development, SEIU attorneys were actually forced to admit in court, under direct questioning from US District Court Judge William Alsup, that none of this was illegal. The judge also admonished these same attorneys while the jury was out of the courtroom that “You are being too greedy!” He was referring to the outlandish damage claims against the defendants.

 

The plaintiffs were forced to concede ground. In an attempt to save face, they dropped many of their accusations and substantially lowered their damage claims from $25 million to around $5 million – all in just the first week of trial.

 

They now allege, with growing difficulty, that the prolonged fight against trusteeship was all a big charade to cover up the real motives of the defendants which were to misappropriate funds and resources to build a new union.

 

But, absolutely no evidence has been produced by SEIU lawyers that points to any stolen property or financial irregularities and, as Siegel emphasized in his opening, “There is absolutely no evidence that any of the 26 defendants spent one nickel of UHW money to form the new union, National Union of Healthcare Workers [NUHW].”

 

Defense attorneys insist that all 26 worked legitimately within UHW democratic structures to fight the trusteeship and, in fact, building the new union did not begin, they argue, until after the defendants resigned from UHW.

 

For example, they cite a January 26, 2009 letter, on the eve of trusteeship, from then-UHW president Sal Rosselli and the entire executive board that indicates genuine intentions to remain within the union. Rosselli’s letter urges SEIU International president Andy Stern to once again consider allowing a vote by the 65,000 UHW long-term healthcare workers on whether they wanted to remain in UHW or whether they wanted to join a new separate SEIU home care unit as the international union insisted.

 

Rosselli and the executive board pledged to remain inside UHW and abide by the outcome of the membership vote regardless of its outcome. Stern rejected this proposal and imposed trusteeship the very next day, on January 27. Rosselli and the executive board were immediately suspended from office.

 

Even more compelling evidence came from one of the plaintiffs’ main witnesses who corroborated critical defense arguments.

 

SEIU witness Leon Chow, an administrative vice president of UHW and head of their San Francisco office during the time in question, was a leading supporter of the local’s fight against trusteeship. He now has been rehired by SEIU into his former UHW leadership position after apparently changing his mind.

 

Nonetheless, Chow testified under cross examination that he never heard about forming the new union, NUHW, until January 28, 2009, one day after the international took control of UHW. This obviously refutes claims that plans to build NUHW occurred over an extended period and that UHW funds and resources were used to build the new union.

 

Chow also testified under cross examination that he never heard of any plans to disrupt the functioning of the local in anticipation of the international taking over the local and that he believed that all the actions by UHW leaders prior to the trusteeship were legal, lawful and in the interests of the membership, the sole purpose being to resist a takeover of their union.

 

Slanders Outside the Courtroom

 

Other inflammatory SEIU charges were never even mentioned in the first week of trial. Despite widely-circulated SEIU slanders that the defendants were thieves and criminals, absolutely no accusations have been made in court that any of the 26 personally benefited from allegations of financial irregularities.

 

Yet, SEIU continues to spread scandalous rumors in what critics call a “character assassination campaign.” Rosselli, now a leader of NUHW, tells of being warmly embraced at work sites by surprised UHW members because “we heard you all were going to jail on March 22.”

 

This is not the usual international union trusteeship displacing corrupt local officials and SEIU has not the audacity to make such claims in open court. On the contrary, the underlying issue of the trial is to punish those who democratically and lawfully utilized UHW resources to strenuously oppose policies of their international officers and who, subsequently, exercised their legal right to form a new union.

 

The lawsuit sends a threatening message throughout the union but, in particular, to the 700,000 members in California, where SEIU feels most vulnerable to the example of 26 UHW leaders who resisted bureaucratic intervention into their local union.

 

It is said that clarity emerges the victor when an idea is challenged and submitted to critical examination. We shall see that theory tested after the next two weeks of trial when the jury renders its verdict, due around April 9. 

 

But certainly we can say with confidence that the court of public opinion has already voted against SEIU’s heavy-handed tactics against UHW, formerly one of the country’s most democratic and militant unions.

 

We can also say with confidence that the issues being argued by plaintiffs’ high-priced attorneys would have been better served if SEIU president Andy Stern had allowed an organized democratic discussion and debate among the 65,000 long-term healthcare workers of UHW. Instead, all the discussion has been compressed into one small courtroom, where 26 dedicated union activists await their fate.

 

Carl Finamore attended each court session during the first week and expects to continue to monitor this immensely important trial. He is a delegate to the San Francisco Labor Council, AFL-CIO, and former President (ret), Air Transport Employees, Local Lodge 1781, IAMAW. He can be reached at local1781@yahoo.com

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