The price of campaigning for union reform can be high. Dissidents in the U.S. labor movement have been fired, blacklisted, and beaten up. In 1969, one was even murdered along with his wife and daughter. (See Yablonski, Joseph A.) In some unions, critics of the leadership face internal discipline, which can lead to fines, suspension, or expulsion. When rebellious rank-and-filers get dragged into court, it’s usually because officials sued them for libel or “copyright infringement” (involving the union logo) to inhibit free speech or shut down opposition websites and Facebook pages.
But that was before the "NUHW 16.” Their four-year legal persecution has become a case study in how a big labor organization, with deep pockets, can make an object lesson of former loyalists who became dissidents, sided with the members, and dared to disobey the dictates of higher union authority.
Oakland lawyer Dan Siegel, who represents these defendants, has been handling cases arising under the Labor Management Reporting and Disclosure Act (LMRDA) since the 1970s. Yet he has “never seen a situation where an international union was using the federal law designed to protect union democracy to sue union dissidents”—until now.
Siegel fears that “more local union officials will be faced with a conflict of interest when their national union and their members tell them to do different things. If they stick with the workers, they could face a lawsuit for damages, measured by the entire budget of the local.”
Birth of a New Union
NUHW is the National Union of Healthcare Workers, the California union created four years ago after the Service Employees (SEIU) removed elected leaders of its third-largest affiliate and , United Healthcare Workers (UHW). In the year before this headquarters takeover, 150,000-member UHW had become the center of a burgeoning SEIU reform movement, which drew support from other California and Nevada dissidents. In January, 2009, UHW's 100-member executive board refused to cooperate with SEIU's attempt to force 65,000 long-term care workers into a yet-to-be-created local without the approval of the affected dues payers. (This controversial restructuring plan was later abandoned after the trusteeship, despite a standing SEIU edict that UHW be stripped of its home care and nursing home workers.)
Rather than continue their reform efforts inside SEIU, rank-and-file leaders of UHW, along with its ousted officers and staff, formed a rival union. Costly representation disputes between NUHW and SEIU . About 10,000 former UHW members or previously unorganized health care workers are now represented by NUHW.
One way to avoid losing NLRB elections,when you face another union on the ballot, is to put your competitor out of business. SEIU followed-up its unpopular trusteeship with a civil suit in federal court seeking $25 million in damages from 28 founders of NUHW.
The gist of SEIU's case was that the connection between a national union and any of its local affiliates is just like the Bank of America's relationship to branch banks. If the parent company (in this case, SEIU) wants to reorganize a local branch or change its management in any way, there's no legal basis for objecting. Despite being elected by the members, local officers owe a greater “fiduciary duty” to the international union than to anyone else. They must comply with any headquarters directive, even if the workers they represent are opposed to it.
Even though the case was tried before a federal judge and white-collar jury sympathetic to this corporate conception of unionism, millions of dollars worth of inflated damage claims were withdrawn or thrown out, and 12 of the original defendants were found blameless.
The Price of Dissent
Yet, in April 2010, the trial court granted SEIU a $1,578,000 judgment against NUHW and 16 former UHW officers, board members, or staffers accused of diverting organizational resources to help create the new union just prior to the 2009 trusteeship.
The defendants personally tagged with half of this damage award were John Borsos, Ralph Cornejo, Marti Garza, Glenn Goldstein, Emily Gordon, Jason Johnson, Mark Kipfer, Gabe Kristal, Barbara Lewis, Dan Martin, Jorge Rodriquez, Sal Rosselli. Fred Seavey, Peter Tappeiner, John Vellardita, and Phyllis Willett. They range from young organizers in their early 30s to veteran labor activists in their 50s and 60s, some with families and mortgages.
UNITE HERE, the hotel workers union then assisting NUHW, posted a $900,000 bond to cover NUHW’s organizational share of the judgment while the verdict was appealed. Five defendants decided to pay SEIU, while others have been subject to wage garnishment.
SEIU tried to block two defendants’ from declaring personal bankruptcy, succeeding in one case. Some defendants have posted cash bonds to postpone payment during the appeal process, but still owe SEIU $40,000 to $85,000 each.
In March of this year, the U.S. Court of Appeals for the Ninth Circuit upheld the overall judgment. The court found that Section 501 of the LMRDA does, indeed, create a fiduciary duty to the union as an organization—not merely to its rank-and-file members.
The appellate court, like the trial court, found it to be irrelevant whether or not “SEIU was a model international union." The three-judge panel chided the defendants “for their decidedly anarchistic methods of opposition” (such as “engaging in ‘dual unionism’ that is not protected speech” under the LMRDA).
A subsequent request by NUHW for a re-hearing on the case was denied. The new union says it is now preparing a petition requesting Supreme Court review. "This is really a very nefarious decision," Siegel warns. "It turns the law of fiduciary duty on its head. Local union officials can be accused of breaching their fiduciary duty if they disobey directives from national union officials contrary to the interests of their members."
The Cost of Litigation
Three years ago, SEIU acknowledged having spent about $5 million, just through the trial stage, on the four law firms it retained to pursue this case. NUHW believes that SEIU has, by now, spent more than $10 million of its members’ dues money on the lawsuit and related legal matters likes bankruptcy court interventions. Any possible SEIU recovery is thus far outweighed by the plaintiff's litigation costs, as estimated by either side.
As Siegel explains: “SEIU is obviously operating on the assumption that they will spend $1,000 to make $50 or $30 or $20 in order to wipe out NUHW and punish anyone associated with it.”
In the view of New York legal researcher (and former NUHW organizer) Ben Ward, the Ninth Circuit opinion demonstrates an unhelpful judicial "preference for a top-down style of unionism, favoring hierarchical, organizational discipline over the principles of internal union democracy and member control of unions."
“The outrage that I feel about them getting even a dime is beyond description,” says 68-year-old Phyllis Willett, former operations manager for the pre-trusteeship UHW, who owes $85,000 after many years of service to two SEIU affiliates. John Vellardita, now executive director of a teachers' union in Nevada, says that "the [courts'] decisions have been wrong. But, if we're required to settle up, I'll settle up."
In SEIU's view, Willett, Vellardita, and their co-defendants are simply liars, cheats, and reprobates who "cannot be trusted to represent union members." In reality, those not retired or still working for NUHW have gone on to other labor movement jobs of considerable responsibility–in AFSCME, the Massachusetts and New York State Nurses Associations, and state affiliates of the AFT or NEA.
Meanwhile, their collective legal expenses continue to mount. Supporters of the NUHW 16 can help defray the cost of their defense by donating to The Fund for Union Democracy and Reform, on-line at http://fundforuniondemocracy.org/ or by sending a check made out to "FUDR" c/o NUHW, 5801 Christie Ave. (Suite 525) Emeryville, CA. 94608.
As defendant John Borsos, now NUHW secretary-treasurer, says, “I wasn’t elected by the international union. I was elected by the rank-and-file members. That, in my opinion, is who I owed my duty to, which is why I don’t have any remorse about listening to the voice of our members at the expense of the international union.
“If we had to do it again, we’d do the same thing.”
(Steve Early has been active in the labor movement since 1972 as a journalist, organizer, lawyer, or national union representative. He is the author of Save Our Unions: Dispatches From A Movement In Distress, forthcoming in November from Monthly Review Press. His previous book, The Civil Wars in U.S. Labor, dealt with intra- and inter-union conflict involving SEIU in California and elsewhere. A shorter version of this article appeared in the August, 2013 edition of Labor Notes. The author can be reached at [email protected])