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Saturday, June 15, 2024 | Back issues
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$1.57M Verdict Against Union Leaders Stands

(CN) - Local union leaders who tried to sabotage their own union and form a rival one must pay more than $1.57 million in combined damages, the 9th Circuit ruled Tuesday.

The federal appeals court in San Francisco upheld a jury verdict for the Service Employees International Union (SEIU) in its dispute with "rogue local union officials" and their rival union, the National Union of Healthcare Workers.

The tension traces back to the SEIU's decision to move 150,000 long-term care workers from three separate unions -- including 65,000 from the local union United Healthcare Workers -- to a new union.

UHW leadership disagreed with this strategy and in 2008 passed a resolution instructing officers "to take any and all appropriate measures" to prevent the split.

But the international union decided to go ahead with its plan to consolidate long-term care workers in California. The SEIU gave UHW five days to either accept the decision or face trusteeship.

The UHW refused to promise not to oppose the new union, so it was placed into trusteeship, which effectively allowed its parent union to replace its leadership. Local union leaders did not take kindly to this development, according to the ruling.

"The evidence at trial showed that UHW officials sought to create an ungovernable situation for trustees appointed to administer UHW by: (1) blocking access to UHW buildings to prevent the SEIU-appointed trustees from entering; (2) removing UHW property from UHW buildings, including office equipment, computers, and employee grievance files; (3) instructing lower-level UHW officials and rank-and-file members not to recognize the authority of the trustees; (4) harassing SEIU staff by storming SEIU's Alameda, California, office; and (5) terminating UHW collective bargaining agreements with California employers," Circuit Judge Richard Tallman explained.

Meanwhile, UHW officers began forming a new union, the National Union of Healthcare Workers, which they touted as a "new, independent, democratic, progressive union." They searched for office space, tried to disaffiliate the local union from SEIU, told UHW members that they could "decertify" and join the new union, and created an off-line database of member contact information to solicit UHW members to join the new union.

They also registered the domain NUHW.org and drafted a press release announcing the new union on Jan. 27, 2009 -- the day the trusteeship was imposed.

The parent union sought a temporary restraining order that would force former UHW leaders to return all union property. Though they claimed not to have any UHW property, they eventually returned "scores of boxes of records belonging to UHW," according to the ruling.

The jury found the defendants in breach of their fiduciary duties under the Labor Management Reporting and Disclosure Act and awarded damages totaling more than $854,000 against the 24 individual defendants and $724,000 against the new union.

The three-judge panel upheld that verdict, saying labor law "imposes a duty to the local union as an organization," not merely to rank-and-file members, as the defendants had argued.

"The defendants actively attempted to obstruct this consolidation, breaching the fiduciary duty they owed their own union as an organization," Tallman wrote. "This breach involved a pattern of conduct of engaging in dual unionism that is not protected speech."

The 9th Circuit also upheld the lower court's reading of the verdict to mean that each individual defendant is independently -- or "severally" -- liable for the damages.

The defendants had claimed the verdict imposed joint-and-several liability, meaning any one defendant may be liable for part of the damages up to the whole amount.

"The district court's reading is both logical and plausible," Tallman concluded.

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