CORE TERMS: election, curative, candidate, campaign, affiliated, Election Rules, honest, entity, campaign contribution, lawful, collective bargaining, campaign literature, fiduciary duties, co-chairman, beneficiary, memberships, twice, duty, Writs Act, first amendment, pension plan, state action, delegate, promulgated, frustrate, indirect, stand-ins, ongoing, slate, underlying litigation
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HeadnotesCOUNSEL: [**1] Otto G. Obermaier, United States Attorney for the Southern District of New York, (Edward T. Ferguson, III, Assistant United States Attorney, of counsel) for the Government.
Frederick B. Lacey, Independent Administrator of the International Brotherhood of Teamsters, (Stuart Alderoty, of counsel), Michael Holland, Election Officer of the International Brotherhood of Teamsters, (Barbara Hillman, of counsel).
Cohen, Weiss & Simon, New York, New York (Susan Davis, of counsel), for Committee to Elect Ron Carey.
Gibson, Dunn & Crutcher, New York, New York (Robert Sacks, Steven Tallent, William Highberger, Pillsbury, Madison & Sutro, San Francisco, California, Robert A. Gordon, Christopher L. Byers, of counsel), for Western Conference of Teamsters Pension Fund and Joseph A. Ballew.
JUDGES: David N. Edelstein, United States District Judge.
OPINIONBY: EDELSTEIN
OPINION: [*819] MEMORANDUM & ORDER
DAVID N. EDELSTEIN, UNITED STATES DISTRICT JUDGE
This decision arises from the implementation of the rules for the International Brotherhood of Teamsters ("IBT") International Union Delegate and Officer Election promulgated by the Election Officer (the "election rules") and approved by this Court by Opinion & Order dated July 10, 1990, 742 F. Supp. 94 (S.D.N.Y. 1990), [**2] and the Court of Appeals United States v. International Brotherhood of Teamsters, 931 F.2d 177 (2d Cir. 1991). These election rules provide a "framework for the first fully democratic, secret ballot election in the history" of the IBT. July 10, 1990 Opinion, supra, 742 F. Supp. at 97.
Petitioners Western Conference of Teamsters Pension Trust Fund (the "Trust") and Joseph Ballew, an employee of the Western Conference of Teamsters and Co-chairman of the Trust appeal decision 91-Elec. App.-106 of the Independent Administrator, which affirmed as modified the Election Officer's decision P-291A-LU278-CSF pursuant to Article X, § 1(a)(8) of the election rules. The Election Officer and Independent Administrator determined that Ballew had violated Article X, § 1.b.(1) of the election rules in connection with the preparation and distribution, at Trust expense, of written materials about Ron Carey, an accredited candidate for IBT General President. Petitioners seek to overturn the findings of the Independent Administrator. This petition was ripe for this Court's review on April 25, 1991. Petitioners twice moved this Court to stay the decision of the Independent Administrator. [**3] This Court denied the first application on April 11, 1991, and the second on May 10, 1991.
The decision of the Independent Administrator is affirmed.
I. Background and Procedural History
The Trust is affiliated with the Western Conference of Teamsters ("WCT"), a subordinate entity of the IBT. The Trust is a multi-employer pension plan established pursuant to § 302(c) of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 186(c), and a pension plan as defined in the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1002(2)(A). The Trust has 14 employee trustees, including Ballew, two other employees of the WCT, with the remaining employee trustees being officers or officials of the WCT. Four of the 14 employee trustees, Arnie Weinmeister, Chuck Mack, Ben Leal, and Michael Riley, are announced candidates for International Office on the "Durham-Mathis Unity Team" slate. (Decision of Independent Administrator [Dec. In. Ad.] at 2).
Ron Carey is the president of IBT local 804 in Long Island City, New York, and a Trustee of the Local 804 IBT/Local 447 IAM United Parcel Employees Pension Plan (the "Local 804 plan"). A notable feature of the Local 804 plan is the "30 [**4] and out" feature, where participants may begin receiving full benefits after 30 years of service, rather than benefits being tied to reaching a certain age. Carey negotiated the Local 804 plan. Carey is an accredited candidate for IBT General President. (Dec. In. Ad. at 3).
The following facts were found by the Election Officer and affirmed by the Independent Administrator. On January 23, 1990, Ballew wrote to Mr. Richard Pirnke, an independent trust administrator, asking Pirnke to review and comment on the Local 804 plan. In that letter, Ballew wrote "Since this plan will be the one that our WCT plan will be compared to, I am sending this to you for your review and comments." (Dec. In. Ad. at 3). That inquiry was not made for the purpose of any pending collective bargaining negotiations, or at the request of any participant in, or beneficiary of the Trust. That inquiry was found to be in response to Carey's campaign and candidacy. (Dec. In. Ad. at 4-5).
On March 19, 1990, Pirnke responded, adversely comparing the local 804 plan to the Trust (the "Pirnke letter"). That comparison noted in particular the demographic differences between the WCT and Local 804 memberships that made the [**5] "30 and out" feature less attractive to Trust participants. (Dec. In. Ad. at 5).
[*820] In November, 1990, Jack R. Bookter, Secretary-Treasurer of Local 278 in San Francisco, California (affiliated with the WCT), sent Ballew a videotape of a campaign presentation by Carey. In that videotape, Carey makes specific reference to the Trust, and the Local 804 plan's "30 and out" feature. (Dec. In. Ad. at 6-7).
On November 28, 1990, Ballew wrote back to Bookter, on Trust stationery, in his capacity as co-chairman/secretary of the Trust (the "Ballew letter"). In that letter, Ballew made unfounded and pejorative remarks about Carey, stating that Carey took unfounded liberties in describing the Local 804 plan. The Ballew letter went on to set out the "limitations of significance" in the Local 804 plan, and then emphasized positive features of the Trust. (Dec. In. Ad. at 6-7).
The Election Officer and Independent Administrator found that Ballew did not circulate the information in the Pirnke letter or use that information for collective bargaining purposes until he was contacted by Bookter. (Dec. In. Ad. at 6-7).
Ballew then sent copies of his letter to all other employee trustees of the Trust. No [**6] employer trustee received a copy. Bookter distributed copies of the Ballew letter to members of his local who inquired about the Carey presentation at local 278 expense. Chuck Mack, a member of the WCT policy committee, distributed the Ballew letter to all members of his Local 70, at IBT expense. (Dec. In. Ad. at 6-7).
After considering the facts as found by the Election Officer and Independent Administrator, the Independent Administrator concluded the following:
It is readily apparent that Ballew's November 28, 1990 letter was designed to refute Carey's campaign statements regarding pensions and the Local Union 804 plan. In short, the Ballew letter is intended to influence the election of Carey as General President. Stated more plainly, the Ballew letter constitutes anti-Carey campaign literature. Given the fact that the Trust is prohibited from making any campaign contribution, its distribution of the November 28, 1990 letter violates the Election Rules.
(Dec. In. Ad. at 8).
The Election Officer ordered the Trust and Ballew to take curative steps (the "curative steps"). These steps were affirmed as modified by the Independent Administrator. Those steps are as follows:
1. The [**7] Trust is prohibited from making any further contributions of value, including distribution of the Ballew letter where the purpose, object, or foreseeable effect of that contribution is to influence the election of a candidate for delegate, alternate delegate or International Officer of the IBT.
2. Ballew is to reimburse the Trust for the cost and expense of the preparation and disbursement of the Ballew letter.
3. Ballew is to bear the expense and distribute copies of a notice to be sent to all persons to whom he had sent his letter advising the recipients of the subject Election Rules violation and a disclaimer by the Trust of the Ballew letter.
(Dec. In. Ad. at 13-16). The Trust and Ballew appeal the findings of the Independent Administrator to this Court.
II. Discussion
With respect to the electoral provisions of the Consent Decree, the Court of Appeals and this Court have now determined that the Investigations Officer and Independent Administrator are stand-ins for the General President and GEB, who properly delegated their power to those Court Officers pursuant to Article XXVI, § 2 of the IBT Constitution. United States v. International Brotherhood of Teamsters, [**8] supra, 931 F.2d 177 (2d Cir., 1991) aff'g July 10, 1990 Opinion & Order, 742 F. Supp. 94; May 6, 1991 Opinion & Order, 764 F. Supp. 787 (S.D.N.Y. 1991); January 17, 1990 Opinion & Order, 728 F. Supp. 1032, 1048-57, aff'd 907 F.2d 277 (2d Cir. 1990);
This Court and the Court of Appeals have interpreted para. K.16 to mean that decisions of the Independent Administrator "are entitled to great deference." 905 F.2d at 616 (2d Cir. 1990) aff'g March 13, 1990 Opinion and Order, 743 F. Supp. 155 (S.D.N.Y. [*821] 1990); May 9, 1991 Memorandum & Order, 764 F. Supp. 797 (S.D.N.Y. 1991); May 6, 1991 Opinion & Order, supra, 764 F. Supp. at 789; December 27, 1990 Opinion & Order, 754 F. Supp. 333, 337 (S.D.N.Y. 1990); September 18, 1990 Opinion & Order, 745 F. Supp. 189, 191-92 (S.D.N. Y. 1990); August 27, 1990 Opinion & Order, 745 F. Supp. 908, 911 (S.D.N.Y. 1990); March 13, 1990 Opinion & Order, supra, 743 F. Supp. at 159-60, aff'd 905 F.2d 610, 622; January 17, 1990 Opinion & Order, supra, 728 F. Supp. at 1048-57, [**9] aff'd 907 F.2d 277 (2d Cir. 1990); November 2, 1989 Memorandum & Order, 725 F. Supp. 162, 169 (S.D.N.Y. 1989); Joint Council 73 et al. v. Carberry, et al., 741 F. Supp. 491, 493 (S.D.N.Y. 1990); Local 27 v. Carberry et al., July 20, 1990 at 3-4, (S.D.N.Y. 1990).
Petitioners make the following four arguments on appeal to this Court: (1) There is no jurisdiction over the Trust; (2) carrying out the curative steps would interfere with the Trust's fiduciary duties to its participants and beneficiaries; (3) Ballew did not violate the election rules; and (4) the curative steps are improper. These arguments will be addressed in turn.
A. Jurisdiction over the Trust and Ballew
The Trust and Ballew argue that since they were not parties to the underlying litigation and non-signatories to the Consent Decree, they cannot be held bound by the Election Rules. They further argue that the Trust and its employees are legally independent from the IBT. This Court and the Court of Appeals have rejected virtually identical arguments numerous times.
The Court of Appeals has repeatedly ruled that IBT affiliated local unions, joint councils and area [**10] conferences -- which specifically argued that they were (i) not parties to the underlying litigation, (ii) non-signatories to the Consent Decree, and (iii) legally independent of the IBT -- are subject to the Consent Decree, and the election rules promulgated pursuant to the Consent Decree. United States v. International Brotherhood of Teamsters, supra (2d Cir. 1991) aff'g July 10, 1990 Opinion & Order, supra; United States v. International Brotherhood of Teamsters, supra, 905 F.2d 610, aff'g March 13, 1990 Opinion & Order, supra; United States v. International Brotherhood of Teamsters, 907 F.2d 277, aff'g January 17, 1990 Opinion & Order, supra; Local 27 v. Carberry, supra.
This Court has determined that it may extend the reach of the election rules to reach entities which could jeopardize the IBT membership's right to a fair, free and honest election, pursuant to its authority under the All Writs Act, 28 U.S.C. § 1651. This Court has ruled that Yellow Freight System, Inc., ("Yellow Freight") a company employing IBT members but not affiliated with the IBT, was subject to the election rules because they were in [**11] a position to frustrate the implementation of the Consent Decree and the election rules, lawful orders of this Court. April 3, 1991 Memorandum & Order, slip op., at 4-6 (S.D.N.Y. 1991) ("Yellow Freight"). An injunction was issued under the All Writs Act requiring that all Consent Decree related litigation must be before this Court. January 17, 1990 Opinion & Order, supra, 728 F. Supp. 1032 (S.D.N.Y.), aff'd 907 F.2d 277 (2d Cir. 1990).
The need to assert jurisdiction over the Trust and Ballew is even more compelling than in Yellow Freight. The Trust is an affiliated IBT entity, and Ballew its employee. Four of its trustees are candidates for International Office and have a direct stake in the outcome of this election. The Trust administers the pension benefits of over 300,000 WCT members. Like Yellow Freight, the Trust and Ballew are in a position to frustrate the membership's right to a free, fair and honest election.
The Election Officer and Independent Administrator found that Ballew in his position as trustee circulated "anti-Carey campaign literature" at Trust expense. The Trust and Ballew must be subject to the election rules so they cannot [**12] use Trust personnel, resources, and status to support a particular slate of candidates. The Trust is barred by Article X, § 1.b.(1) of the election rules from making any campaign contribution to a candidate. A campaign contribution is defined by the election rules [*822] as "any direct or indirect contribution where the purpose, object or foreseeable effect of that contribution is to influence the election of a candidate." (Election Rules, § A-1 at p. 6) See United States v. International Brotherhood of Teamsters, supra, 931 F.2d 189-90 (2d Cir. 1991) (holding that Election Officer must construe definition of "campaign contribution" in broad manner mandated by Consent Decree.)
The Trust and Ballew argue that they cannot be bound by the Consent Decree's election process by the Supreme Court decision in Martin v. Wilks, 490 U.S. 755, 109 S. Ct. 2180, 2184, 104 L. Ed. 2d 835 (1989), since by that decision non-parties to a Consent Decree cannot be bound by its terms. The Second Circuit has twice held that Martin v. Wilks is inapplicable to this ongoing case, United States v. International Brotherhood of Teamsters, supra; United States v. International Brotherhood of Teamsters, supra, 905 F.2d at 622 (2d Cir. 1990), [**13] and this Court has so held in five published opinions. See Yellow Freight, supra; January 29, 1991 Opinion & Order, 754 F. Supp. 333, 134 F.R.D. 50 (S.D.N.Y. 1991); Joint Council 73 v. Carberry, et al. supra; January 17, 1990 Opinion & Order, supra; November 2, 1989 Memorandum & Order, supra.
Martin v. Wilks concerns the procedural fairness due entities affected by a Consent Decree. By the election rules, the Trust and Ballew have had a full and complete opportunity to argue the substance of their claims before the Election Officer, the Independent Administrator, and this Court. In addition, they have twice moved this Court for stays of the curative steps, and have filed a notice of appeal, and petitions for a stay pending appeal and mandamus to the Court of Appeals. The Trust and Ballew have had their day in Court.
B. The Trust and Ballew's Fiduciary Duties
Ballew and the Trust argue that the curative steps would force them to violate their duties as fiduciaries of the Trust. Ballew and the Trust also argue that the Ballew letter was an appropriate exercise of Ballew's responsibilities under ERISA.
The status of [**14] the Trust, and the duties of Ballew as a fiduciary of the Trust are set by §§ 404 of ERISA, 29 U.S.C. §§ 1104-06. The fiduciary duty to provide plan comparisons is set out at § 1022 of ERISA, 29 U.S.C. § 1022. Section 1022 of ERISA requires trustees to furnish participants with "summary plan descriptions" upon request, and contains no statutory requirement to specifically compare one plan with another, as done by Ballew here. Id. Thus, the relief ordered would not hinder the Trust's duty to provide plan information.
The record established by the Election Officer and Independent Administrator demonstrate that the Ballew letter was not an appropriate response to a participant inquiry, but instead a partisan attack on the Carey campaign. It was found that there was no prior Trust practice of selectively comparing the Trust with another plan outside of collective bargaining or organizing efforts. (Dec. In. Ad. at 8-10). Rather, it was found that the timing and content of the Ballew letter were done only to respond to the Carey campaign. (Dec. In. Ad. at 8). Thus, enjoining such future action would not infringe on any fiduciary duties.
Accordingly, no part of the curative steps [**15] would prevent the Trust or Ballew from responding to appropriate inquiries by Trust beneficiaries for information as is their right under § 1022 of ERISA.
C. Violations of the Election Rules
Ballew and the Trust argue that the record does not support the finding of the Election Officer and Independent Administrator that Ballew's actions constituted a contribution that had a direct or indirect effect on Mr. Carey's candidacy in violation of Article X, § 1.b.(1) of the election rules. The record before this Court is to the contrary. Ballew and the Trust violated the election rules.
The Independent Administrator found that Ballew's initial solicitation of the plan comparison from Mr. Pirnke, the response of Mr. Pirnke, the content and form of the Ballew letter, the sending of the Ballew letter, and its distribution were calculated to be anti-Carey campaign material. This [*823] finding by the Independent Administrator also considered Mr. Ballew's fiduciary duties as Trust co-chairman, the Trust's history of providing plan comparisons, and the presence of four candidates for international office as employee trustees of the Trust. The Trust and Ballew have failed to persuade this Court that [**16] the factual findings were arbitrary or capricious.
The Court finds no basis for finding that the conclusion that the Trust and Ballew violated the election rules is arbitrary and capricious. In fact, the evidence before the Independent Administrator is credible to support the finding that the Ballew letter was a contribution intended to influence the 1991 IBT election.
Further, the Independent Administrator also determined that Article XI, § 2 of the election rules gives the Election Officer authority to correct conduct:
If the Election Officer determines that these rules have been violated or that any other conduct has occurred which may prevent or has prevented a fair, honest, and open election, the Election Officer may take whatever remedial action is necessary.
The Independent Administrator and Election Officer determined that the Ballew letter was anti-Carey campaign literature that would have the effect of preventing a fair, honest and open election. The finding is supported by the record.
D. The Propriety of the Curative Steps
The Election Officer ordered the curative steps in the context of an ongoing IBT election that will not be over until December, 1991. Well-tailored [**17] remedies for violations of the election rules should have the effect of (i) discouraging future violations of the election rules, and (ii) curing the improper taint of the conduct. The curative steps are calculated to bring these about.
The curative step that prevents the Trust and Ballew from future violations of the election rules only preclude the Trust and Ballew from violating the Consent Decree and election rules, lawful orders of the Court. The curative steps do not prevent the Trust or Ballew from carrying out any of their lawful duties.
The curative step that directs Ballew to reimburse the Trust for the cost of the plan comparison, and that he circulate a disclaimer by the Trust is reasonable step to restore the status quo ante.
The curative steps do not implicate Ballew's first amendment right to free speech. Ballew sent his letter in his official capacity as trustee of the Trust. An ERISA trustee has no right to influence an election for union office. Further, the Consent Decree bars anyone from taking any improper action which would influence the 1991 election. Additionally, the Trust and Ballew cannot establish the state action necessary for a first amendment violation. [**18] This Court has held many times for state action purposes that the Court officers act as stand-ins for the IBT General President and GEB, and not as the Government. May 9, 1991 Opinion & Order, supra, 764 F. Supp. 797 (S.D.N.Y. 1991); Cozza v. Lacey, supra; 740 F. Supp. 285, (S.D. N.Y.1990); January 17, 1990 Opinion & Order, supra.
Ballew and the Trust have not demonstrated that the curative steps were arbitrary or capricious, and their objections are rejected.
III. Conclusion
For the reasons stated above, the opinion of the Independent Administrator is affirmed in all respects.
So Ordered.