In the Matter of Local Union 43
Cedar Rapids, IA

 

Laborers’ International Union of North America
Independent Hearing Officer

 

Docket No. 03-07T
Decided: March 31, 2003
ORDER AND MEMORANDUM

 

This Order and Memorandum addresses the hearing called for by Laborers’ International Union of North America (LIUNA) General President Terence M. O’Sullivan (General President) to consider whether LIUNA Local Union 43 (Local 43) in Cedar Rapids, Iowa, should be placed under Supervision.

 

PROCEDURAL HISTORY

 

By letter dated January 10, 2003, LIUNA General Counsel (General Counsel) informed the LIUNA General Executive Board (GEB) Attorney of the problematic situation involving Local 43 and requested a recommendation regarding supervision of the Local. See General Counsel Exhibit (GC Ex.) 3 (Letter from Michael S. Bearse to Robert D. Luskin of 1/10/03). The GEB Attorney responded with no objection to the commencement of supervision action against Local 43. See GC Ex. 2 (Letter from Robert D. Luskin to Michael S. Bearse of 1/16/03). On March 7, 2003, the General President properly informed Local 43 members and officers that the Independent Hearing Officer (IHO) would conduct a supervision hearing as a result of “information and reports that . . . Local 43 has committed a serious and ongoing breach of its constitutional duty as an affiliate of the Iowa, Nebraska, and South Dakota Laborers’ District Council.”¹ GC Ex. 1 (Notice of Supervision Hearing from the General President to Local 43 Officers and Members of 3/7/03).

1 The Business Manager of Local 43 averred that notice of this hearing was inadequate. See Local 43 Ex. 2 (Comments of 3/17/03) (“The notice does not set forth any clear specifics. No persons are identified. No dates are set forth. No documents are referred to. It is not possible to prepare an adequate defense from the notice given in this matter.”). A complaint for supervision must “set out in writing the factual basis for the alleged violations of law of the union’s constitution that justify the imposition” of a supervision. Becker v. Industrial Union of Marine & Shipbuilding Workers, 900 F.2d 761, 768 (4th Cir. 1990). The notice need not rise to the level of detail required in judicial proceedings. Cf. Luggage Workers Union, Local 167 v. International Leather Goods, Plastics & Novelty Workers Union, 316 F. Supp. 500, 508 (D.Del. 1970) (notice insufficient for failure to inform local union of acts supporting imposition of

Pursuant to Article IX, Section 7 of the LIUNA Uniform International Union Constitution (International Constitution), the IHO held a Supervision Hearing on March 18, 2003, in Cedar Rapids, Iowa. Id. General Counsel Michael S. Bearse, Esquire appeared on behalf of the International Union. Other attendees included: Ed Smith (Smith), Vice President and Midwest Regional Manager; Bill Gerhard (Gerhard), Business Manager/Secretary­-Treasurer of the Iowa, Nebraska, and South Dakota Laborers’ District Council (District Council); David Hayes (Hayes), International Representative; Chris Williams (Williams), Interim Director of the Iowa Laborers’ Building Training Fund (Statewide Training Fund); Hamonde Hasson (Hasson), the Business Manager of Local 43 and Trustee of the Local 43 Apprenticeship Training & Education Trust Fund (Local 43 Training Fund); and John Ryan (Ryan), Local 43 Secretary-Treasurer. Approximately 40 LIUNA members, many from Local 43, attended the hearing; some spoke on the record.² See Sign-In Sheet of 3/18/03; Transcript of March 18, 2003 Supervision Hearing (Tr.).

 

LEGAL STANDARDS Supervision Requirements

 

The Labor Management Reporting and Disclosure Act (LMRDA) gives a governing body, in this case LIUNA, discretion in placing its member organizations under supervision to correct certain problems. See 29 U.S.C. §§ 461-466. A governing body seeking to impose supervision upon its subsidiary must give the targeted entity a full and fair hearing. See 29 U.S.C. § 464(c). Title 29 U.S.C. § 462 states that supervisions shall be established and administered only in accordance with the constitution and bylaws of the organization which has assumed supervision over the subordinate body. See 29 U.S.C. § 462. Under Article IX, Section 7 of the International Constitution, the LIUNA General President may appoint a supervisor when:

 

action is necessary for the purpose of correcting corruption or financial malpractice, assuring the performance of collective bargaining agreements or other duties of a bargaining representative, restoring democratic procedures or otherwise carrying out the legitimate objects of such subordinate body of

trusteeship). In a supervision complaint, General Counsel is “not required to provide the level of detail found in a bill of particulars in a criminal case, or even that of a LIUNA disciplinary matter.” In the Matter of the Chicago District Council, IHO Order and Memorandum, 97-30T (September 9, 1997), citing In the Matter of Local 210, IHO Order and Memorandum, 95-25T (December 29, 1995).

2 Fifty members of Local 43 signed a petition protesting the International’s efforts to place Local 43 under supervision. See Local 43 Ex. 4 (Protest Document).

the International Union, or to protect the organization as an institution . . .

 

International Constitution, Article IX, Section 7.

 

Supervisions and trusteeships both come under Article IX, Section 7 of the International Constitution. See International Constitution, Article IX, Section 7. Both may be put in place for similar reasons, such as, inter alia, collective bargaining issues, financial issues in a local or district council, and organized crime issues. Tr. 4:7-10 (BEARSE). The grounds listed in Article IX, Section 7 exactly mirror the grounds that are provided by federal labor law in the LMRDA. Tr. 4:13-15 (BEARSE). However, a supervision differs from a trusteeship in several aspects. When imposed, a trusteeship, unlike a supervision, automatically removes any incumbent officers. Tr. 4:16-18 (BEARSE). A supervision is a more flexible tool that allows the International, upon proper showing, to request and have a supervisor appointed. Tr. 4:18-21 (BEARSE). The supervisor may, but is not required to, remove some, all, or none of the officers of a local. Tr. 4:21 – 5:3 (BEARSE); see also, e.g., In the Matter of Local 1058, IHO Order and Memorandum, 00-08T (March 9, 2001) (trusteeship too intrusive for oversight required, supervision ordered instead).

 

Constitutional Provisions

 

Affiliates Obligations Under the International Constitutional

 

Article XVIII, Section 1 of the International Constitution clearly delineates the obligations of local unions, district councils, and union officers. Article XVIII, Section 1 states that:

 

[e]ach affiliated Local Union and each affiliated District Council and the officers thereof, shall conform to and comply with all of the obligations as provided for in the Uniform Local Union Constitution, Uniform District Council Constitution, and the Uniform International Union Constitution, respectively.

 

International Constitution, Article XVIII, Section 1.

Local Union Obligations Under the Uniform Local Constitution

 

The duty of local unions to comply with both the International Union and its affiliated District Council are more specifically outlined in Article II, Section 3(b) of the LIUNA Uniform Local Union Constitution (Constitution):

 

[a] Local Union shall recognize and be subject to all of the provisions of the International Union Constitution and, if so affiliated, the Uniform District Council Constitution, and shall comply with all such rules, regulations, policies, practices and lawful orders and decisions of the International Union, its officers, and General Executive Board, and, if so affiliated, of the District Council and its Executive Board.

 

Constitution, Article II, Section 3(b).

 

In addition, local unions within a territorial and trade jurisdiction of a District Council are required to affiliate with that District Council. Article II, Section 3(c) of the Constitution provides:

 

Local Unions within the territorial and trade jurisdiction of a District Council shall affiliate with such District Council and shall also affiliate with appropriate Bodies, such as Building and Construction Trades Councils, Metal Trades Councils, Maritime Trades Councils, State Federations of Labor and Central Bodies.

 

Constitution, Article II, Section 3(c).

 

District Council Constitutional Provisions

 

In terms of the objectives of the District Council, several sections of the Uniform District Council Constitution (District Council Constitution) address the District Council’s responsibility for unifying all of the economic and other forces of the affiliated local unions in its area. See Article II, Sections 1(b), 1(c), 1(d), 1(h), and 1(i). District Councils consolidate the strength of their affiliated local unions in order to act in the best interest of the widest group of participating members and local unions. District Councils, as the central representative bodies of local unions, have, as their objects, to effectuate the following:

 

(b) [t]o promote unity of action in dealing with employers;

 

(c) [t]o coordinate and consolidate the activities of its various affiliated Local Unions that have a common interest;

(d) [t]o foster harmony and united action between its affiliated Local Unions;

 

(h) [t]o promote and foster respect for and compliance with the Constitution of the International Union, the Uniform Local Union Constitution and this Constitution and all of the rules, regulations, policies, practices and lawful orders and decisions adopted and promulgated in the furtherance and administration of the said Constitutions; and,

 

(i) [t]o promote respect for, compliance with and observance of all the provisions of agreements by it and its affiliated Local Unions and all the members thereof.

 

District Council Constitution, Article II, Sections 1(b), 1(c), 1(d), 1(h), and 1(i).

 

The District Council Constitution reposes in the District Council the authority to coordinate bargaining and, if it wishes, to direct bargaining on behalf of its affiliated local unions in order to achieve the objects listed in Article II, Section 1. Article II, Sections 2(a) and 2(d) of the District Council Constitution state that, the District Council shall have the authority:

 

(a) [t]o establish proper rules, regulations, policies and practices as it deems necessary or appropriate to fulfill the purposes for which the District Council was chartered . . . . No action of a District Council shall be subject to the approval or disapproval of its affiliated Local Unions; and,

 

(d) [t]o negotiate, bargain for and enter into understandings and agreements with employers, for and in behalf of its affiliated Local Unions and to enforce and police the observance thereof by employees and employers, Local Unions and their members and when, after due deliberation, it believes and deems it necessary, to take such proper and lawful economic action as may be required to accomplish and effectuate the welfare of its affiliated Local Unions and members. Except as herein otherwise specifically provided, each District Council shall be autonomous in the exercise of its right to negotiate and consummate agreements with employers and to establish the bases for policing and enforcing the terms and conditions thereof.

 

District Council Constitution, Article II, Sections 2(a) and 2(d) (emphasis added).

Along with these powers, the District Council is relegated certain obligations:

 

[t]he District Council shall carry out, perform and comply with all of the objects and powers as outlined in Article II of this Constitution and the objects of the International Union. This obligation shall include, but not be limited to, the exercise of the District Council’s authority to bargain on behalf of its affiliated Local Unions.

 

District Council Constitution, Article III, Section 1. FINDINGS OF FACT

 

1. Local 43 is affiliated with the Iowa, Nebraska and South Dakota Laborers’ District Council. See General Counsel Exhibit (GC Ex.) 3 (Letter from Michael S. Bearse to Robert D. Luskin of 1/10/03).

 

2. Nine affiliated local unions comprise the District Council, among them six construction locals. Tr. 29:24 – 30:2 (GERHARD).

 

3. Local 43 is the second largest affiliated construction local union in terms of active membership in the state of Iowa. Tr. 30:3-7 (GERHARD).

 

4. Up until 2002, Local 43 and all the other affiliated construction locals in the state of Iowa were participants in the Statewide Training Fund. Tr. 30:13­17 (GERHARD).

5. Local 43 was the second largest participant in the Statewide Training Fund in terms of contributions. Tr. 37:15-20 (GERHARD).

 

6. Between January 1998 and May 1, 2002, Local 43 ranked second in the state of Iowa for participation in the Statewide Training Fund. Tr. 52:18-19 (WILLIAMS). A total of 203 trainees from Local 43 attended 488 courses; only Local Union 177 (Local 177) had greater participation during that period. Tr. 52 (WILIAMS).

 

7. Local 43 is currently the only affiliated local within the District Council that does not participate in the Statewide Training Fund. Tr. 37:10-14 (GERHARD).

8. The International Union estimates that, as a result of Local 43 discontinuing its participation in the Statewide Training Fund, the Statewide Training Fund has lost approximately $50,000 in revenue since May 1, 2002. Tr. 7:11-17 (BEARSE).

The Iowa Laborers’ Training Fund Trust

 

9. In or about 1982, the District Council and the Construction Employers Council of Master Builders of Iowa (Master Builders’ Association) signed a Revised Agreement and Declaration of Trust of the Iowa Laborers’ Training Fund (Revised Trust Agreement). See GC Ex. 4 (Revised Trust Agreement). The trust created “shall remain in full force and effect unless terminated by the [Master Builders’] Association or Union by giving to the other party and to the Trustees written notice thereof at least sixty (60) days prior to the intended date of termination.” Id. at Article VIII, Section 1 (When Termination Occurs).

 

10. One of the specific purposes of the Revised Trust Agreement is to create a trust fund “for the purpose of defraying the costs appertaining to the training of laborers, including, but not limited to, prevocational, vocational and advancement training, training and retraining.” Id. at Article II, Section 2 (Purpose and Application of Trust Fund).

 

11. When initiated, the Revised Trust Agreement allocated a contribution of $0.08 per hour to the Statewide Training Fund. Id. at Article 1(A) (Wages).

12. The Board of Trustees consists of eight trustees, at all times equally representing the District Council and the Master Builders’ Association. Id. at Article III, Section 1 (Designation of Trustees). In addition, the District Council and the Master Builders’ Association are both free to select and appoint trustees of their own choosing. Id.

 

13. The Trustees, by majority vote, have the power to amend the Revised Trust Agreement “in any respect from time to time,” except that “no amendment shall divert the Trust Fund as constituted . . . or be inconsistent with the provisions of applicable collective bargaining agreements.” Id. at Article VII (Amendments).

 

14. Article IV, Section 3 of the Revised Trust Agreement addresses the liability of unions, employers, and trustees. Id. In pertinent part, that section states that “neither the Union nor the [Master Builders’] Association shall be liable for the action of any Trustee appointed by it” or “for the obligations of any Trustee.” Id. at Article IV, Section 3 (Liability of Unions, Employers And Trustees).

 

15. Article VI, Section 2 of the Revised Trust Agreement provides that

 

[n]o person, partnership, corporation, or association dealing with the Trustees shall be obliged to see to the application of any funds or property of the Trust Fund, or to see that the terms of this Revised Agreement and Declaration of Trust have been complied with, or be obliged to inquire into the necessity or expedience of any act of the Trustees . . . .

Id. at Article VI, Section 2 (Dealings With Trustees). Contribution Increase to the Statewide Training Fund

16. On February 6, 2002, the District Council held its Executive Board meeting and regular monthly meeting. See GC Ex. 5 (District Council Minutes of the Combined Executive Board and Regular Monthly Meeting of 2/6/02).

 

17. Pursuant to Article VII of the Revised Trust Agreement, the District Council delegates voted to increase the minimum contribution to the Statewide Training Fund to $.12/hr, effective May 1, 2002, to $.15/hr, effective May 1, 2003, and to $.20/hr, effective May 1, 2004. Id.

 

18. Gerhard noted that the District Council partially initiated the February 6, 2002, motion to standardize the contribution rates to the Statewide Training Fund from the various locals. Tr. 34:13-23 (GERHARD). Contribution rates were “all over the board.” Id. There had been animosity among some locals that were paying more than other locals; the majority of locals paid $.10/hr, but two locals paid $.15/hr and Local 43 only paid $.8/hr. Tr. 34:13-23 (GERHARD).

 

The Local 43 Training Fund

 

19. The District Council first became aware that Local 43 was pursuing a BAT apprenticeship program sometime in mid-2000. Tr. 56 4-17 (HASSON). Both sides agree that extensive work went into developing a BAT approved apprenticeship program with Local 43 and its contractors over the course of two years. Both sides further agree that the International Union directed local unions to develop apprenticeship programs at the last two International conventions. Tr. 64 – 65 (RYAN).

 

20. In an undated letter to all signatory contractors that referenced a March 5, 2001 vote of Local 43’s membership, Business Manager Hasson informed all signatory contractors that there would be a Building Agreement wage increase on May 1, 2001, in the Cedar Rapids, Iowa area. See GC Ex. 8 (Letter of Hamode [Hass] Hasson to All Signatory Contractors of unknown date). The letter referenced an addendum for $0.05 for “apprentice,” effective January 1, 2002. Id.

 

21. Although both Hasson and Ryan contended that the District Council was always fully aware of the training component attached to Local 43’s apprenticeship program, the record suggests otherwise.

22. Beginning at the January 9, 2002 Combined Executive Board and Regular Monthly Meeting of the District Council, the minutes reflect there was a “question regarding the apprenticeship program of Local Union #43.” GC Ex. 4

(District Council Minutes of the Combined Executive Board and Regular Monthly Meeting of 1/9/02).

 

23. Gerhard elaborated that a “red flag went up at the January meeting . . . we became aware at that time that Local 43 was not only pursuing a joint apprenticeship training program, but they were planning on hiring their own instructors and doing their own training and really taking over the function of the training fund.” Tr. 32:12-17 (GERHARD). Gerhard further stated that the District Council “had to ask quite a few series of questions to Hass [Hasson] to get him to reveal that they were indeed planning on doing their own instructing and their own training. It was almost like he was keeping it hidden from us.”³ Tr. 33:3-6 (GERHARD).

24. At that January meeting, Gerhard “emphasized [to Hasson] that you can’t pull out of the Statewide Training Fund and if any agreement or anything comes to the council that doesn’t have the appropriate contributions rate to the Building Training Fund that I would recommend it not be ratified.” Tr. 33:2-25 (GERHARD).

 

25. Five days before the April meeting of the District Council and without first seeking ratification by the District Council, Local 43 Business Manager Hasson informed Henry Jannenga (Jannenga), the Director of the Statewide Training Fund at that time, that Local 43, Allied Construction Interests, Inc. (Allied), and other employers had amended their Collective Bargaining Agreement to establish an apprenticeship and training program for Local 43. See GC Ex. 7 (Letter from Hamode O. Hasson to Henry A. Jannenga of 3/29/02).

 

26. Pursuant to the new agreement, Hasson informed Jannenga that, effective May 1, 2002, the signatory employers to Local 43’s Collective Bargaining Agreement would no longer contribute to the Statewide Training Fund. The Statewide Training Fund would receive final contributions from the Local 43 contractors in April 2002. Id.

 

27. On April 3, 2002, the Combined Executive Board and Regular Monthly Meeting of the District Council was held. See GC Ex. 6 (District Council Minutes of the Combined Executive Board and Regular Monthly Meeting of 4/3/02).

3 As further indication that the District Council was unaware of what Local 43 had planned, and by Hasson’s own admission, during one District Council meeting Hayes made a motion to accept the Local 43 apprenticeship program and then withdrew it when he realized that there was money tied to it. Tr. 41 – 42 (HASSON).

28. At the April 3, 2002, District Council meeting, delegates from Local 43 presented an apprenticeship program, which consisted of an amendment to the Local 43 Collective Bargaining Agreement (Amendment). Id. The Amendment would cease all Local 43 contributions to the Statewide Training Fund effective May 1, 2002, and direct contributions to the new Local 43 Training Fund. Id.

29. The Local 43 presentation also included an addendum to their Collective Bargaining Agreement (Addendum), which would allow contractors to pay an additional $0.05 per hour into the Local 43 Training Fund. Id. There were “lengthy and often heated discussions” among the District Council delegates regarding the proposed Local 43 Training Fund. Id. The minutes of that meeting reflect, while the delegates largely approved of Local 43’s BAT approved apprenticeship program, many of the delegates believed that Local 43 was “‘re-inventing the wheel’ and duplicating already existing services” in its attempt to hire instructors and create a curriculum for training. Id. The delegates noted that those services already existed within the Statewide Training Fund. Id.

 

30. A motion was made by Gerhard and seconded by Hayes that the District Council not ratify the Amendment to Local 43’s Collective Bargaining Agreement. Id. A hand count vote of the District Council delegates was taken; the vote was seven votes against ratification, to three votes in favor. Id.

31. On April 3, 2002, the District Council did not ratify Local 43’s Amendment to its Collective Bargaining Agreement.

 

32. A motion was made by Gerhard and seconded by Hayes that the District Council not ratify the Addendum to Local 43’s Collective Bargaining Agreement. Id. A hand count vote of the District Council delegates was taken; the vote was seven votes against ratification, to three votes in favor. See GC Ex. 6 (District Council Minutes of the Combined Executive Board and Regular Monthly Meeting of 4/3/02).

 

33. On April 3, 2002, the District Council did not ratify Local 43’s Addendum to its Collective Bargaining Agreement.

 

Local 43’s Stated Objections to Participating in the Statewide Fund

34. Local 43’s motivation and reasons for establishing the Local 43 Training Fund included, inter alia, that Local 43 felt it did not receive the training it requested; Local 43 could be a better steward of its own money; Hasson did not feel that Local 43 had representation on the Statewide Training Fund Board of Trustees; and the Statewide Training Fund was corrupt and inefficient.

Alleged Mismanagement and Non-Accountability of the Statewide Fund

35. At the hearing, Hasson and others speaking on behalf of Local 43 averred that Local 43’s withdrawal from the Statewide Training Fund was largely attributable to corruption within the Statewide Training Fund.

 

36. In support of its contention, Local 43 referenced the guilty pleas of Jannenga, the Vice President of affiliated Local 177 and Director of the Statewide Training Fund, and Fred Risius (Risius), the Business Manager/Secretary-Treasurer of Local 177. See GC Ex. 22 (United States v. Jannenga, Criminal No. 02-159, Plea Agreement (Jannenga Plea Agreement) (S.D. IO (July 25, 2002)); Local 43 Ex. 3 (United States v. Risius, Criminal No. 02-160, Plea Agreement (Risius Plea Agreement) (S.D. IO (July 25, 2002)).⁴

 

37. Jannenga pled guilty to a one-count Information charging him with embezzlement from a labor union in violation of 29 U.S.C. § 501(c). See GC Ex. 22 (Jannenga Plea Agreement). In addition to various improprieties as an officer of Local 177, Jannenga embezzled $3,392.54 from the Statewide Training Fund while serving as Director. Id. The United States District Court for the Southern District of Iowa ordered Jannenga to pay restitution in the aforementioned amount to the Statewide Training Fund. Id.

38. At the hearing, Hasson stated that Gerhard disclosed Jannenga’s guilty plea “to others, but not to Local 43.” Tr. 58:11-12 (HASSON). Hasson averred that this alleged omission, coupled with Gerhard’s refusal to release a purported $6,000 in Statewide Training Fund contributions owed to Local 43, and the Fund’s alleged reluctance to provide Local 43 contractors with financial information on the Statewide Training Fund, rendered the District Council and the Statewide Training Fund suspect in the eyes of both Local 43 members and contractors. Tr. 58 – 60 (HASSON).

39. Michael Novy (Novy), Vice President of the Weitz Company in Cedar Rapids, testified at the hearing about the “apprenticeship program” that Local 43 contractors had negotiated and discussed in 2000. Tr. 68 – 69 (NOVY). Novy stated that the original intent of the program was to “maintain the State Training program as it was.” Tr. 70:12-13 (NOVY). Novy said that remained the objective until the Statewide Training Fund “was not providing credible financial information” and some of the “management” of the Fund were convicted of misappropriating money. Tr. 70 – 71 (NOVY). Novy elaborated

4 Although Hasson strongly urges otherwise, Risius’ guilty plea is of no moment here. Risius pled guilty to crimes he committed while Business Manager/Secretary-Treasurer of Local 177. See Local 43 Ex. 3 (Risius Plea Agreement). Those acts did not involve or implicate the Statewide Training Fund. Id.

on some perceived violations of the Employee Retirement Income Security Act (ERISA) related to the Fund’s rental of a facility from Local 177, as well as on whether the Fund itself “is a legal entity because there’s concerns about fiduciary responsibility,” and liability from “our attorneys on that basis.” Tr. 71 (NOVY).

40. Novy acknowledged that, up until recently, the Weitz Company had one of the management trustees on the Statewide Training Fund for a couple of years that had been appointed as a trustee by the Master Builders’ Association. Tr. 72:23 – 73:8 (NOVY). Novy also acknowledged that the Weitz Company does business outside Local 43’s jurisdiction and, in those areas, the Weitz Company does contribute to the Statewide Training Fund. Tr. 74 (NOVY). Despite the numerous “legal problems” associated with contributing to the Statewide Training Fund in Local 43’s jurisdiction, the Weitz Company routinely pays such contributions in every other jurisdiction without objection. Id.

41. Everett Krug (Krug), Chairman of the apprenticeship program and associated with Rinderknecht Construction in Cedar Rapids, also testified regarding the contractors’ determination not to contribute to the Statewide Training Fund “because of unknown liabilities.” Tr. 76 – 77 (KRUG). However, Krug acknowledged that his company is a member of the Master Builders’ Association, which is the joint-trustee of the Statewide Training Fund.

 

Statewide Training Fund Facilities

42. Gerhard testified that Local 43 felt that they were not represented in the current Statewide Training Fund, were in need of more training, and were not receiving training that they had requested. Tr. 34:4-7 (GERHARD).

43. The fixed location for the Statewide Training Fund is in Truro, Iowa. Tr. 35:16 (GERHARD). Gerhard testified that the fixed location in Truro is approximately 160 miles from Cedar Rapids, Iowa, where Local 43 is located. Tr. 35:20 (GERHARD).

 

44. Gerhard testified that the Statewide Training Fund “traditionally” conducts training on demand and that the training is mobile; instructors and equipment are taken to where the training is needed. Tr. 35:8-11 (GERHARD).

 

45. Williams is the Interim Director of the Statewide Training Fund. Prior to assuming the position of Interim Director, Williams served as an instructor for the Statewide Training Fund in the Cedar Rapids area. Tr. 47:21 – 48:10 (WILLIAMS).

46. Williams testified that Jim Treu (Treu) was also an instructor for the Statewide Training Fund in the Cedar Rapids area for more than one year.

Williams and Treu worked as instructors on a part-time basis and conducted on­site training in the Cedar Rapids area. Tr. 48:14 – 49:4 (WILLIAMS).

 

47. Williams did not exclusively instruct for the Statewide Training Fund and did not exclusively provide instruction in the state of Iowa. Williams recalled that Local 43 had, on one instance, requested training from the Statewide Training Fund when he was unavailable, but another instructor was brought in from Chicago to fill in for Williams. Tr. 53:3-14 (WILLIAMS).

 

48. Williams testified that during his tenure with the Statewide Training Fund, no request for training from Local 43 was ever denied. Tr. 49:8 (WILLIAMS).

The International and District Council Response to Local 43

 

49. On April 16, 2002, Gerhard wrote to the General President informing the International that, despite the District Council’s refusal to ratify either Local 43’s Amendment or Addendum because the delegates felt that Local 43’s Training Fund would have been an unwise use of scarce training dollars and would duplicate established statewide programs, Local 43 fully intended to implement the unapproved Amendment and Addendum. See GC Ex. 16 (Letter from William G. Gerhard to Terence M. O’Sullivan of 4/16/02).

 

50. On April 26, 2002, the General President responded regarding “Mandatory Participation in [the] Statewide Training Fund,” stating that “[t]he District Council has full authority over all matters pertaining to collective bargaining . . . .” GC Ex. 14 (Letter of Terence M. O’Sullivan to William G. Gerhard of 4/26/02). The General President elaborated that “the authority of a District Council to control collective bargaining is a core value in LIUNA.” Id. The General President noted that the 1991 Resolution No. 9 “specifically called for the ‘expanded use of cost effective regional training.’” Id. In an effort to prevent “an unfortunate step backwards . . . to locally based training,” the General President advised that the International would “use all available constitutional means to protect the District Council’s authority in this area.” Id.

 

51. By letter dated April 30, 2002, Business Manager Hasson presented Local 43’s side of the issue to the General President.⁵ See GC Ex. 17 (Letter from Hamode Hasson to Terence M. O’Sullivan of 4/30/200). Hasson began by

5 Hasson directly acknowledged the General President’s April 26, 2002 letter in another letter dated May 7, 2002. See GC Ex. 15 (Letter from Hamode Hasson to Terence M. O’Sullivan of 5/7/02). That letter directed the General President’s attention to both Hasson’s April 30, 2002 letter and Novy’s May 1, 2002 letter, and requested further advise on how to address Local 43’s current Collective Bargaining Agreement with its contractors. Id.

mentioning that “Local 43 is the 9(a) recognized bargaining agent⁶ having obtained all the necessary signature cards and going through the appropriate procedure to achieve such status.” GC Ex. 17 (Letter from Hamode Hasson to Terence M. O’Sullivan of 4/30/200). Hasson further elaborated that Local 43 and its Union contractors established the Local 43 Training Fund, with BAT approval in July 2001.⁷ Id.

 

52. On May 1, 2002, Novy wrote to the General President and informed him that Local 43 contractors had an agreement with Local 43 that did not expire until April 30, 2003, and that the contractors were patently unaware of the need for District Council approval of any contract with Local 43. See GC Ex. 18 (Letter from Michael F. Novy to Terence M. O’Sullivan of 5/1/02). Novy went on to aver that the District Council “has known since at least January 9, 2002 of the establishment” of the program. Id. Novy further averred that “[t]he present state operated training program is inefficiently managed and does not justify the $.08/hr now sent to it, much less an increase in funding.” Id.

53. On May 6, 2002, Gerhard sent a letter to Hasson asking Local 43 to “cease and desist immediately in [its] attempts to establish a self funded autonomous fund” and outlined the following actions to be taken:

6 Section 9(a) of the National Labor Relations Act reads:

 

[Exclusive representatives; employees’ adjustment of grievances directly with employer] Representatives designated or selected for the purposes of collective bargaining by the majority of the employees in a unit appropriate for such purposes, shall be the exclusive representatives of all the employees in such unit for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment, or other conditions of employment: Provided, That any individual employee or a group of employees shall have the right at any time to present grievances to their employer and to have such grievances adjusted, without the intervention of the bargaining representative, as long as the adjustment is not inconsistent with the terms of a collective­-bargaining contract or agreement then in effect: Provided further, That the bargaining representative has been given opportunity to be present at such adjustment.

 

NLRA § 9(a).

 

7 Hasson also expounded on Local 43’s position regarding the District Council and the Statewide Training Fund, discussed more fully supra.

1. Commence immediately, payment of the appropriate rate to the Iowa District Council Building Training Fund (BTF). The correct and current rate as of May 1, 2002, is $.12 per hour.

 

2. Establish a joint Labor Management Apprentice Training Committee (JATC) to advertise for, select, monitor and establish the training curriculum and on-the-job training hours for Local Union #43 Apprentices.

 

3. Modify the Standards of Apprenticeship document for the Local #43 apprenticeship program to reflect the above changes.

 

GC Ex. 12 (Letter from William Gerhard to Hamode Hasson of 5/10/02).

54. On May 15, 2002, Hasson responded to Gerhard, advising him that the increase in the Statewide Training Fund had been voted down by Local 43 membership; Hasson did not “have the authority to unilaterally change the Collective Bargaining Agreement;” the Local 43 Training Fund had been established prior to January 1, 2002, and approved by the Department of Labor (DOL); and Local 43 contractors objected to participating in the Statewide Training Fund. GC Ex. 13 (Letter from Hamode Hasson to William G. Gerhard of 5/15/02).

55. On June 10, 2002, the General President responded to the two issues that Hasson had presented to the International. See GC Ex. 11 (Letter from Terence M. O’Sullivan to Hamode Hasson of 6/10/02). First, the General President specifically stated that Local 43’s status as a 9(a) representative did not bear upon participation in the Statewide Training Fund. Id. The General President said, “The question is not whether contractors have an obligation to bargain with the District Council instead of Local 43. Rather, the question is who has the authority to speak for Local 43 in collective bargaining.” Id. As the General President reiterated, Article II, Section 2(d) of both the Constitution and District Council Constitution “clearly and unambiguously place that authority in the District Council.” Id. Second, the General President noted that Local 43’s objections to the convenience and availability of training were matters to be worked out through discussions with the Statewide Training Fund and the District Council. Id. The General President did not equivocate: “What is not permissible is for a single Iowa local affiliate to decide unilaterally that it will pull out of the statewide training program.” Id.

 

56. Notwithstanding the General President’s clear message, Hasson informed Midwest Regional Manager Smith on July 12, 2002, that Local 43’s Collective Bargaining Agreement ran until April 30, 2003, and asserted that the local contractors would “consider” the Statewide Training Fund “in the future if

it could be shown that the Fund was properly being operated.” GC Ex. 9 (Letter from Hamode Hasson to Edward M. Smith of 7/12/02).

 

DISCUSSION

The controversy in the Supervision of Local 43 requested by the International Union involves Local 43’s establishment of a Local 43 Training Fund to the exclusion of the Statewide Training Fund and without the consent of the District Council. Collective bargaining is the central issue. Local 43 asserts that it founded its own training fund because it doubted the integrity of the Statewide Training Fund. However, this was not a remedy available to Local 43. In Upstate New York Laborers’ District Council, a number of local unions refused to pay their per capita tax on the grounds that the District Council was dysfunctional. See Upstate N.Y. Laborers’ Dist. Council, Report of Special Hearings Panel of 9/10/97, aff’d 1/26/98. The Special Hearings Panel of the General Executive Board found that the refusal was an inappropriate and unconstitutional means of expressing dissent. Id. The Hearings Panel held that the proper means to question the activities of the District Council was to proceed in a constitutional manner and appeal to the General Executive Board. Id.

 

The District Council Constitution provides for the chartering of District Councils upon the application of affiliated locals when combination of economic power and effort is advantageous. See District Council Constitution, Article 1, Section 1. Through its District Council Constitution, the International requires that bargaining negotiations of all affiliated locals be conducted by the District Council. See Gordon, et al. v. Laborers’ Int’l Union of N. Am., 490 F.2d 133, 137 (10th Cir. 1973). “In fact, this has been the rule within the International Union for more than 50 years.” GC Ex. 11 (Letter from Terence M. O’Sullivan to Hamode Hasson of 6/10/02). As early as 1947, the District Council Constitution provided that all agreements with employers or associations would be made by the District Council or subject to the approval of it. See 1947 UDCC, Article IV, Section 2.

 

Hasson and some Local 43 contractors present that they were unaware that there could not be a binding contract between Local 43 and the contractors without submission to, and approval by, the District Council. As the General President acknowledged, the practice of the District Council over a long period of time has been to delegate its bargaining authority, particularly on building work, to its local affiliates. See GC Ex. 11 (Letter from Terence M. O’Sullivan to Hamode Hasson of 6/10/02). Indeed, the record suggests that the District Council has never previously rejected a contract proposal brought to it by Local 43. However, that history does not disrupt the District Council’s continuing authority and responsibility to exercise oversight and review of Local 43’s proposed agreement. To suggest otherwise would nullify the ratification process in which Local 43 itself engaged. By bringing the Amendment and Addendum

to Local 43’s Collective Bargaining Agreement to the District Council for approval, Local 43 tacitly acknowledged that such approval was necessary.

 

Moreover, the other locals affiliated with the District Council have all negotiated collective bargaining agreements that contain provisions for contributions to the Statewide Training Fund. Local 43 contractors who employ LIUNA members from other jurisdictions have not challenged the legitimacy of the Statewide Training Fund. In fact, those contractors that do not contribute to the Statewide Training Fund within Local 43’s jurisdiction do contribute on behalf of LIUNA members from other jurisdictions. Therefore, Local 43 and its contractors’ objections to the Statewide Training Fund are without merit. Similarly, Local 43 contractors who cited “legal concerns” as the reason the Statewide Training Fund contributions would not be made in Local 43’s jurisdiction are disingenuous; the provisions of the Revised Trust Agreement clearly and plainly do not hold contributors responsible for the actions of the Trust or the Trustees.

 

Accordingly, it seems clear that Local 43 unilaterally elected to discontinue contributions to the Statewide Training Fund in disregard of the objectives and rules of the District Council and International Union. Local 43 was less than forthcoming with the District Council in its representations regarding the apprenticeship program that, in fact, became the Local 43 Training Fund. Both the International and the District Council repeatedly notified Local 43 officers that the Local 43 Training Fund was invalid. Local 43 has given no assurances that it will comply with its obligations under the Constitution in the upcoming contract negotiations with Local 43 contractors beginning in April 2003.

 

CONCLUSIONS

 

1. The International Union complied with all of the necessary procedural requirements for imposing the Supervision.

2. The District Council possesses the Constitutional responsibility and authority to negotiate and enter into collective bargaining agreements with employers on behalf of its affiliated local unions.

3. The District Council’s establishment of coordinated bargaining and the development of the Statewide Training Fund as a bargaining goal are common and legitimate union objects.

 

4. The blatant and deliberate failure of Local 43’s officers to abide by LIUNA constitutional rules when acting as the Local’s collective bargaining agents regarding the manner and means for advancing and achieving training constitutes a permissible basis for imposing Supervision under the International Constitution.

5. The Supervision is necessary to assure collective bargaining agreements and to restore democratic procedures.

 

6. Local union disputes with a District Council should be addressed to the proper forum, by appeal to the General Executive Board.

 

DECISION

 

 

Based upon the evidence presented by the International Union at the Supervision hearing, supervision of Local 43 is necessary to assure the performance of collective bargaining agreements and other duties of the bargaining representative. The General President is authorized to impose Supervision over Local 43 in conformance with the provisions of Article IX, Section 7 of the International Constitution.

 

PETER F. VAIRA

 

INDEPENDENT HEARING OFFICER