OFFICE OF THE INDEPENDENT HEARING OFFICER
IN THE MATTER OF |
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DOCKET NO. |
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LOCAL UNION 2 CHICAGO, ILLINOIS |
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99-25T |
ORDER AND
MEMORANDUM
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This Order and Memorandum addresses the emergency trusteeship imposed on Laborers’ International Union of North America (“LIUNA”) Local Union 2 (“Local 2”) in Chicago, Illinois by the General President on May 24, 1999.
The General President imposed the emergency trusteeship on Local 2 pursuant to Article IX, Section 7 of the LIUNA International Union Constitution. On June 15, 1999, the Independent Hearing Officer (“IHO”) held a hearing in Cicero, Illinois to determine whether the trusteeship should continue. On July 14, 1999, the IHO issued a Summary Order finding that the General President was authorized to impose the trusteeship and that the trusteeship should continue. This Order and Memorandum supplements the Summary Order of July 14, 1999.
Findings of Fact
1. Pursuant to Section 3 of the LIUNA Ethics and Disciplinary Procedure and Article IX, Section 7 of the LIUNA Constitution, the LIUNA General President may appoint a trustee when:
the General President finds, in his opinion, that action by him
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 or the International
Union, or to protect the organization as an institution . . ..
LIUNA International Constitution, Article IX, Section 7.
In addition, the General President may determine that an emergency situation exists and
may appoint a temporary trustee or supervisor prior to a hearing on the trusteeship charges
against the local. Id.
2. The GEB Attorney is delegated the powers of the General President “to impose and review the imposition of trusteeships over any district council, local, or other entity within the Union.” See LIUNA Ethics and Disciplinary Procedure, Section 5.
3. Pursuant to Section 5 of the LIUNA Ethics and Disciplinary Procedure the IHO “shall preside over and provide rulings in” the imposition of all trusteeships.
The allegations of the GEB Attorney are discussed below.
The Influence of Organized Crime
4. Local 2 is located in Chicago, Illinois and consists of approximately 1,200 members.
5. John Matassa (“Matassa”) has been Local 2’s President and Business Manager for over ten years.
6. In the Chicago District Council trusteeship proceedings, the IHO found that Matassa was a made member of the Chicago Outfit of La Cosa Nostra (“LCN”). In the Matter of the Chicago District Council, 97-30T, IHO Order and Memorandum (Feb. 7, 1998). In a subsequent separate disciplinary procedure, the IHO found that as a result of his membership in the Chicago Outfit, Matassa had committed barred conduct. In Re Matassa, 98-43D, IHO Order and Memorandum (May 12, 1999). The IHO ruled that Matassa’s LIUNA membership should be revoked. Id. Matassa has appealed to the LIUNA Appellate Officer (“AO”). As the appeal is currently pending, Matassa has remained in office as the Business Manager and President of Local 2.
7. On April 2, 1985, the Executive Board of Local 2 unanimously approved the appointment of Matassa to the position of field representative despite the fact that prior to that date, Matassa was not a member of LIUNA.
8. On May 5, 1987, having only been a member of LIUNA for two years, Matassa became Business Manager of Local 2 following an uncontested election.
9. On July 17, 1989, following the resignation of the Local 2 President, the Executive Board unanimously appointed Matassa to a combined position of President/Business Manager and voted to increase Matassa’s salary.
10. One of the goals of organized crime is to infiltrate and control the labor movement. See In the Matter of the Chicago District Council, Order and Memorandum, 97-30T. Often, unions become places of employment for organized crime figures who are placed in key positions.
11. The IHO has noted that “Matassa’s rapid rise in LIUNA is no accident and is not due to his skill in the labor movement. By virtue of his LCN membership, he is required to do nothing to inhibit the influence of organized crime figures, or to acknowledge their presence to the hierarchy of LIUNA.” In the Matter of John Matassa, Jr., 98-43D, IHO Order and Memorandum, (May 12, 1999).
12. The presence of Matassa in this key position is sufficient evidence that Local 2 is under the influence of organized crime. The fact that an LCN made member is an officer of a union is proof that organized crime has a direct and indirect effect on the affairs of that particular union entity. See In the Matter of Salvatore Franco, IHO Order and Memorandum, 98-04D (October 6, 1998).
13. The GEB Attorney also offered evidence that Matassa brought Vince DiVarco, the son of a deceased member of the Chicago Outfit, into the union. DiVarco attended the trusteeship hearing and was represented by counsel who filed a memorandum on behalf of DiVarco. There is no evidence that DiVarco has any organized crime connections beyond his relation to Joseph “Caesar” DiVarco. To the contrary, there is substantial evidence in the record that DiVarco has worked to maintain open communication with the members of Local 2 in the face of efforts by other members of the Executive Board to conceal various events from the membership.
The IHO has noted in the past that being the son or close relative of an LCN figure should not, standing alone, be determinative of an individual’s status as a member of organized crime. When several children or close relatives of LCN figures appear on a union roster, without any other presence in the labor movement, and are suddenly employed in high ranking jobs, an inference may be raised that their positions are the result of the influence of organized crime. In DiVarco’s case, there is substantial evidence that he is a hard worker for Local 2 and that DiVarco is respected by the other members, including the dissidents. The IHO does not find that DiVarco’s employment is evidence of the influence of organized crime.
14. The GEB Attorney presented evidence that on January 12, 1990, upon the recommendation of the Chicago District Council, Matassa proposed that Dominick DiMaggio (“DiMaggio”) be appointed to the position of field representative and the Executive Board unanimously approved.
15. DiMaggio is the nephew of LCN bosses Roy and Sam Carlisi , of the Chicago Outfit and the Buffalo LCN.
16. The GEB presented testimony that DiMaggio arranged golf outings between Matassa and various LCN figures.
17. On January 14, 1991, upon the recommendation of Matassa, DiMaggio was appointed to fill the vacant position of Vice President of Local 2. The evidence presented by the GEB Attorney concerning DiMaggio is somewhat mixed. Although DiMaggio is related to LCN figures and arranged at least one golf outing between Matassa and DiMaggio’s LCN relatives, there was credible evidence that DiMaggio worked diligently to keep the general membership informed on major developments within Local 2 while Matassa continually attempted to keep this information from the general membership. The IHO can make no credible findings as to DiMaggio on the state of this record. Further determinations are left to the discretion of the trustee.
Failure to Follow Democratic Procedures
18. Local 2 has not held a contested election since 1984.
19. Uncontested elections, standing alone, do not warrant a finding of failure to follow democratic procedures within a local union. However, when it has been demonstrated that the local union is influenced by organized crime, a series of uncontested elections is an indication of a breakdown of democratic procedures within a local union.
20. The failure to follow democratic procedures in Local 2 was demonstrated in the manner in which a proposed supervision was handled. On April 26, 1999, The GEB Attorney approached the Local 2 Executive Board to discuss a voluntary supervision. After consideration of the proposal, the Executive Board rejected the proposal. The Executive Board did not inform the general membership of the proposed supervision. A proposed supervision is a significant event that should have been disclosed to the general membership.
21. Despite the attempt to keep the proposed supervision from the members, at the regularly scheduled general membership meeting of May 11, 1999, the general membership learned of the proposed supervision by way of an inquiry from another member. Edward J. Erb, (“Erb”) testified that member John Burke asked Matassa about the proposed superivision. A shouting match then took place between Burke and Matassa, and Matassa denied that there had been a proposed supervision and denied that there had been a meeting with the GEB Attorney to discuss it. Because the meeting became so contentious, a majority of those present agreed to continue the meeting to May 22, 1999.
22. The general membership expected to discuss the voluntary supervision at the May 22, 1999, meeting.
23. The Executive Board failed to send notice of the May 22, 1999, meeting to the general membership.
24. Thirty members who were present at the May 11, 1999, meeting appeared for the meeting on May 22, 1999. When they arrived at the Local 2 offices, the doors were locked and no one else was present.
25. No meeting was held on May 22, 1999.
26. The IHO does not find the Executive Board’s failure to submit to a voluntary supervision is evidence of improper motives. The failure to inform the membership of the GEB Attorney’s proposal, followed by the denial that there had been such a proposal and the May 22 1999, lock-out, is evidence of the failure to follow democratic procedures.
27. Erb testified that membership meetings have been cancelled because Matassa has determined that a quorum was not present when in fact a quorum was present. This testimony was not corroborated and standing alone is not probative.
28. Mark Tomasik (“Tomasik”) has been a member of Local 2 for the past five years.
29. Tomasik testified that the Executive Board members failed to inform the general membership of certain financial affairs of Local 2, even though the minutes of meetings reflect that the membership had been informed. This testimony was not corroborated and the matter is left to the trustee for further investigation.
Financial Malpractice
30. On December 12, 1989, the Executive Board voted to give Matassa the authority to reduce or increase the salaries of elected officers. This is in direct violation of Article IX, Section 6 of the Uniform Local Constitution (“Constitution”), which mandates that adjustments in salary be voted on by the membership after proper notice is given and that the membership must approve the increase at two consecutive meetings. Such action also violates Article VI, Section 1(d) of the Constitution, which requires that salaries of officers shall be fixed prior to the nominations for office.
31. The GEB Attorney presented evidence that on February 1, 1994, Matassa unilaterally executed a deferred compensation agreement in his favor. The agreement required a signature from the employer and the employee. Matassa signed the agreement in his capacity as President /Business Manager of Local 2 and in his capacity as an employee of Local 2. The Executive Board was not notified of the deferred compensation agreement until May 9, 1995, but no Executive Board approval was sought. Further, the general membership was never informed of the deferred compensation agreement or given an opportunity to vote on it as required by Article IX, Section 6 of the Constitution. In addition, it appears that no other officer was given the opportunity to execute a similar agreement.
32. Aside from the lack of ratification by the Executive Board and the fact that the other officers were not given a similar opportunity, the GEB Attorney has not presented any evidence of how Local 2 has been financially harmed by the agreement. The matter is left for further investigation by the trustee.
33. The GEB Attorney offered evidence that on May 11, 1999, the membership voted 40-10 that the Executive Board was to write no checks on behalf of Local 2. Although this may be evidence of the membership’s distrust of the Executive Board, the vote is of questionable legality because the financial obligations of the union must be paid. The IHO will not judge the officers’ actions based upon this motion.
34. Following the imposition of the trusteeship on May 24, 1999, Matassa and Michael Christopher (“Christopher”), the Secretary/Treasurer, were ordered to refrain from writing checks. Despite this order, Matassa and Christopher executed checks to the Executive Board members of Local 2 and to an attorney in excess of $85,000. Tr. 169-180. Matassa received two checks amounting to a total of $20,773.92; Christopher received a check for $14,730.18; Vince DiVarco (Recording Secretary) received a check for $3,184; Dominick DiMaggio received a check for $1,592; and an outside attorney received a check for $18,243. Vince DiVarco returned his check to David Schippers, the trustee.
The trustee immediately took action to stop payment
on the checks. Payment on all but two
of the checks, which Matassa had cashed, was stopped.
36. The GEB Attorney further alleged that Matassa made improper use of union funds to hire a defense attorney for his disciplinary case. The record reflects that the Executive Board authorized the payment of $125,000 to attorneys who worked on Matassa’s defense and on the Chicago District Council proceedings. Ex. 48. In addition, Local 2 hired Matassa’s attorneys to investigate whether Matassa had ties to organized crime. The presentation of evidence on this issue is not clear. From the state of the record, the IHO cannot determine if the retention and payment of the attorney was proper. There is no indication that the attorney shared any responsibility in this matter. The trustee should resolve the issue.
CONCLUSIONS
1.
Matassa’s
position as a made member of the Chicago Outfit and the Business Manager of
Local 2 demonstrates the overriding influence of organized crime in Local 2.
2.
Local 2 has not
held a contested election since 1984.
This fact, combined with the overriding influence of organized crime in
Local 2, the efforts of the Executive Board to prevent the membership from
learning of the possibility of a trusteeship, and the Executive Board’s failure
to allow the general membership to discuss the supervision, is substantial
evidence a failure to follow democratic procedures.
3.
There is
substantial evidence of financial malpractice within Local 2. Matassa was given arbitrary power to increase
or decrease officer salaries in violation of the Constitution. After the trusteeship was put in place
Matassa and Secretary/Treasurer Christopher, in direct contravention of the
emergency trusteeship order, signed a series of checks totaling $85,000. Despite the intervention of the trustee,
checks totaling $25,000 cleared.
DECISION
Based upon the evidence presented by the GEB Attorney, the trusteeship of Local 2 is necessary to protect the organization as an institution, to restore democratic procedures and to
correct financial malpractice. The General President is authorized to continue the trusteeship over Local 2 in conformance with the provisions of Article IX, Section 7 of the LIUNA International Union Constitution.
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s/Peter Vaira
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PETER F. VAIRA |
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INDEPENDENT HEARING OFFICER |
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Date: July 29, 1999 |
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Local 2 Dwight Bostwick, Esquire David Schippers, Esquire |
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