VIA UPS OVERNIGHT - IBTvote

[Pages:19]October 23, 1996

VIA UPS OVERNIGHT

James P. Hoffa

Stephen Presser

2593 Hounds Chase

Cohen, Weiss & Simon

Troy, MI 48098

330 W. 42nd Street

New York, NY 10036

Lawrence Brennan, President

Teamsters Joint Council 43

Patrick J. Szymanski

2801 Trumbull Avenue

Baptiste & Wilder, P.C.

Detroit, MI 48216

1150 Connecticut Avenue, N.W., Suite 500

Washington, DC 20036

Terence F. Majka, President

Teamsters Joint Council 18

Bradley T. Raymond

5 Rutger Park

Finkel, Whitefield, Selik, Raymond,

Utica, NY 13501

Ferrara & Feldman, P.C.

32300 Northwestern Highway, Suite 200

Coleman Davis, President

Farmington Hills, MI 48334

Teamsters Local Union 523

123 W. 11th Street

Ron Carey Campaign

Tulsa, OK 74101

c/o Nathaniel K. Charny

Cohen, Weiss & Simon

John Sullivan, Associate General Counsel

330 W. 42nd Street

International Brotherhood of Teamsters

New York, NY 10036

25 Louisiana Avenue, N.W.

Washington, DC 20001

Re: Election Office Case No. P-1019-IBT-NYC

Gentlemen:

James P. Hoffa October 23, 1996 Page 2

A pre-election protest was filed pursuant to Article XIV, Section 2(b) of the Rules for the 1995-1996 IBT International Union Delegate and Officer Election ("Rules") by James P. Hoffa, a member of Local Union 614 and a candidate for general president, on September 26, 1996. By letter dated September 27, 1996, Terence F. Majka, president of Local Union 182 and Joint Council 18, joined in the protest. In essence, the protest claims that General President Ron Carey, his attorney Nathaniel Charny and the law firm of Cohen, Weiss & Simon ("CWS") violated Article VIII, Section 11(f); Article XII, Section 1(b); and Article XIII of the Rules by threatening in the press to file a libel action against Messrs. Hoffa, Majka and others for statements made in campaign-related material.

Specifically, the protesters make the following arguments:

? Respondents violated the Rules by threatening to file the libel action in retaliation for Mr. Hoffa making certain statements in his campaign literature, such statements being protected as free speech under the Rules and the Labor-Management Reporting and Disclosure Act, as amended ("LMRDA"), 29 U.S.C. ?411(a)(2);

? The IBT was involved in bringing this suit. Thus, the IBT is responsible for the retaliation and has also made an illegal campaign contribution to the Carey campaign. As part of this general allegation, they assert that IBT General Counsel Judy Scott advised members of the press about the suit before it was formally released and lobbied a CNN correspondent concerning the suit. They further assert that the libel complaint utilizes work product developed by the IBT in unrelated litigation. They also assert that Mr. Carey was represented by IBT lawyers in connection with a Department of Labor investigation which resulted in a report cited in the lawsuit;

? Finally, protesters assert that any ex parte communications between Mr. Carey's attorneys and the Election Officer prior to the filing of the suit are improper, both because they taint the appearance of impartiality and because the reference to those

James P. Hoffa October 23, 1996 Page 3

communications in the press has created the impression that the Court-appointed officers have endorsed or are supporting Mr. Carey.

Mr. Carey acknowledges announcing his intent to file a libel action and then filing the complaint in state court. He argues that he acted in his individual capacity without any union support, that the suit is well-grounded, and that the Rules do not prohibit an individual from vindicating his right to be free from defamation.

New York City Protest Coordinator Barbara C. Deinhardt investigated this protest. At the request of the Election Officer, the parties submitted detailed position papers on a variety of legal issues, as well as evidence in support of their respective positions.

I. Factual Background

On September 25, 1996, the Carey campaign issued a press release announcing that Mr. Carey was filing a libel lawsuit against Mr. Hoffa and several local Teamster officials, charging them with a "wide-ranging scheme . . . to publish and circulate false, defamatory, and malicious statements and innuendo" about him. The press release was circulated on that day to approximately a dozen national reporters along with a copy of the draft complaint. Within the next few days, the press release only was widely distributed to news outlets throughout the country. On September 26, 1996, the New York Daily News carried a story about the suit, briefly describing its basis. Other press reports appeared as well.

The draft complaint which was made public named as defendants Messrs. Hoffa, Majka, Lawrence Brennan and Coleman Davis.1 At the time the alleged libel was published, Messrs. Brennan, Majka and Davis were running on a slate of candidates opposed to Mr. Carey's slate in the 1996 IBT International officer election. As nominated candidates for International office, this slate published campaign materials in the September 1996 issue of the Teamster magazine which included statements which Mr. Carey claimed to be defamatory.

The complaint focuses of two sets of allegations made by various Hoffa campaign materials:

UPS Stock Ownership--Hoffa campaign literature has charged Mr. Carey with secretly owning between $400,000 and $2 million worth of stock in United Parcel Service ("UPS") during the time Mr. Carey was general president of the IBT and was leading union negotiations against UPS for a new contract. Among the statements identified as libelous are the following:

1Mr. Brennan is president of Local Union 337 and of Joint Council 43. Mr. Davis is president of Local Union 523.

James P. Hoffa October 23, 1996 Page 4

"Carey never disclosed that he owns close to $2 million of UPS stock."

"Carey's UPS deal took care of his stock and you got nothing."

"[T]hanks to UPS millionaire stockholder Carey, thousands of feeder driver jobs will be lost."

"Carey's $2 million of UPS stock comes before you."

"Why Did Carey Fail to Disclose UPS Stock During 1993 Negotiations?"

The libel complaint states that this is untrue, that Mr. Carey's father had owned UPS stock which went into the estate when the elder Carey died. According to the complaint, the stock was sold by the estate in August 1992, and the Department of Labor (DOL) determined on August 18, 1993 that Mr. Carey never held any direct or indirect interest in the stock. The complaint further alleges that the defendants knew of the DOL report, but instead relied on an earlier inaccurate newspaper article for support.

Use of UPS Attorney to Defraud Elderly Friend--Hoffa campaign literature has also claimed that Mr. Carey swindled Ann Morgen, an elderly woman, into naming him as the principal beneficiary of her will and then collecting approximately $300,000 from the estate when she died. The literature further claims that Mr. Carey used a UPS lawyer, Joseph Previte, to rewrite the woman's will in Mr. Carey's favor. The Hoffa campaign literature made such statements as the following:

"Carey swindled an old lady out of nearly $300,000. HIS LAWYER? You guessed it. ON THE PAYROLL OF UPS."

"Next year, there'll be another UPS contract up for negotiation. Who will come first? The UPS lawyer Carey used to help him swindle $300,000 from an old widow, Carey's $2 million of UPS stock, or you?"

"In 1987, Carey hired a high-powered UPS lawyer, Joseph Previte, to draft a new will for the elderly Ms. Morgan [sic] replacing her earlier will. The earlier will did not even mention Ron Carey . . ."

James P. Hoffa October 23, 1996 Page 5

The complaint states that the allegations are untrue in that Ms. Morgen was a longtime family friend whom Mr. Carey took care of during her final years and that Mr. Previte was never a UPS attorney. The complaint further alleges that the defendants, together with the "Hoffa/Brennan libel machine," manufactured the will contest and planted the libelous stories in the press.

The complaint places the allegations of defamation within the context of the 1996 International officer election. It points out that the defendants are all candidates running against Mr. Carey and his slate in the 1996 International officer election. It recites Mr. Carey's original election in 1991 and how the defendants have opposed his program ever since. It also makes the defamation claims only against his electoral opponents for statements made in campaign literature, but does not make any claims against the newspapers that also published the alleged defamation.

Sometime after the complaint was filed, the Carey campaign issued a leaflet which contains reproductions of the DOL report and Previte affidavits, next to a caption, "Now, Ron Carey is making Hoffa answer for his lies - in court and in front of the membership!"

On September 30, 1996, Mr. Carey's attorneys filed the complaint in the New York State Supreme Court for Queens County.2 The New York Times carried a story about the suit on October 1, 1996. The complaint is signed by James L. Linsey and Stephen Presser, partners at the New York City law firm of Cohen, Weiss, and Simon ("CWS"). The law firm is counsel to the Carey campaign, but also has regularly represented the IBT in various legal matters. For the libel case, Mr. Carey executed a personal retainer agreement with CWS on September 19, 1996, in which he agreed to compensate his lawyers on a straight time basis and to be responsible for all costs.

II. Discussion

The key issue in this case is whether the Rules provide immunity for campaign speech from a private state law libel action. The protesters argue that the right of free speech in the campaign setting is unconditional, and that the Rules are violated if a libel suit is filed for statements made in campaign communications. In response, Mr. Carey asserts that the Rules do not prohibit the filing of a well-founded libel action which alleges the defamation was published with actual malice and where the suit is not sponsored or supported by the union. For the reasons stated below, the Election Officer concludes that a well-founded libel complaint is not automatically barred by the Rules.

A. Right of Union Members to File Well-Founded State Law Libel Actions

2The Supreme Court in New York State is the major trial court, and is not the highest appellate court as the name might imply.

James P. Hoffa October 23, 1996 Page 6

Article VIII, Section 11(a) of the Rules recognizes the right of all union members to "participate in campaign activities, including the right to run for office, to support or oppose any candidate, to aid or campaign for any candidate, and to make personal campaign contributions." Article XIII of the Rules further incorporates the right of union members to freedom of expression and assembly from Section 101(a)(2) of the LMRDA, 29 U.S.C. ?411(a)(2); and Section 401(e) of LMRDA prohibiting reprisal against a member for campaigning, 29 U.S.C. ?401(e).3

3Section 101(a)(2) states, in relevant part: Every member of any labor organization shall have the right to meet and assemble freely with other members; and to express any views, arguments, or opinions; and to express at meetings of the labor organization his views, upon candidates in an election of the labor organization or upon any business properly before the meeting, subject to the organization's established and reasonable rules pertaining to the conduct of meetings . . .

29 U.S.C. ?411(a)(2). Section 401(e) states, in relevant part: [E]very member in good standing shall be eligible to be a candidate and hold office (subject to section 504 of this title and to reasonable qualifications uniformly imposed) and shall have the right to vote for or otherwise support the candidate or candidates of his choice, without being subject to penalty, discipline, or improper interference or reprisal of any kind by such organization or any member thereof.

29 U.S.C. ?481(e).

James P. Hoffa October 23, 1996 Page 7

Article VIII, Section 11(f) of the Rules prohibits any retaliation against anyone by the Union or its agents for exercising any right guaranteed by the Rules.4 To demonstrate retaliation, a protester must show that conduct protected by the Rules was a motivating factor in the adverse decision or conduct in dispute. The Election Officer will not find retaliation if she concludes that the union officer or entity would have taken the same action even in the absence of the protester's protected conduct. Gilmartin, P-032-LU245-PNJ (January 5, 1996), aff'd, 95 - Elec. App. - 75 (KC) (February 6, 1996). See Leal, P-051-IBT-CSF (October 3, 1995), aff'd, 95 - Elec. App. - 30 (KC) (October 30, 1995); Wsol, P-095-IBT-CHI (September 20, 1995), aff'd, 95 - Elec. App. - 17 (October 10, 1995).

The Election Officer has consistently held that the Rules "neither prohibit nor regulate the content of campaign literature." Rogers, P-518-LU373-SOU (February 21, 1991). Rather, as the Election Officer has stated, "[t]he goal to be protected is free speech." Newhouse, P-388-LU435RMT (February 21, 1996). See Landwehr, P-201-LU795-MOI (November 15, 1995); Braxton, P304-LU623-PHL (May 21, 1991) ("The model for free and fair Union elections is that of partisan political elections . . . The cardinal principle is that the best remedy for untrue speech is more free speech, with the electorate being the final arbiter").

Here, however, Mr. Carey asserts a countervailing right, which is the right of IBT members to submit well-founded claims for personal injury to the courts. In Bill Johnson's Restaurants v. NLRB, 461 U.S. 731 (1983), the Supreme Court addressed an analogous situation. There, a group of employees lawfully picketed the restaurant where they worked, complaining of unfair treatment and bad working conditions. Employer officials threatened to get even with the workers and subsequently filed a lawsuit against them alleging, among other claims, libel for a leaflet circulated by the workers. The workers filed unfair labor practice charges with the National Labor Relations Board ("NLRB"). Id. at 734. The NLRB ultimately held that the employer had committed an unfair labor practice by pursuing a baseless lawsuit against the workers. Id. at 736-37.

4Article VIII, Section 11(f) states:

Retaliation or threat of retaliation by the International Union, any subordinate body, any member of the IBT, any employer or other person or entity against a Union member, officer or employee for exercising any right guaranteed by this or any other Article of the Rules is prohibited.

James P. Hoffa October 23, 1996 Page 8

In reviewing the Board decision, the Supreme Court noted that while the National Labor Relations Act ("NLRA") contained "broad, remedial provisions that guarantee that employees will be able to enjoy their rights secured by ?7 of the Act," there were also "weighty countervailing considerations." Id. at 741. The Court recognized that the right of access to the courts is protected by the First Amendment to the U.S. Constitution. Id. Further, the Court recognized that the NLRA did not preempt defamation actions under state law, provided the plaintiff met certain federally imposed standards for proving defamation. Id. at 742; see Linn v. United Plant Guard Workers, 383 U.S. 53 (1966). Weighing these competing interests, the Supreme Court concluded, "The filing and prosecution of a well-founded lawsuit may not be enjoined as an unfair labor practice, even if it would not have been commenced but for the plaintiff's desire to retaliate against the defendant for exercising rights protected by the [NLRA]." Id. at 743.

In holding that a well-founded libel action could not be enjoined as an unfair labor practice, even if it was filed with a retaliatory motive, the Court found that baseless litigation was not immunized by the First Amendment right to petition. The Court therefore held that "it is an enjoinable unfair labor practice to prosecute a baseless lawsuit with the intent of retaliating against an employee for the exercise of rights protected by ?7 of the NLRA." Id. at 744.

This rule is consistent with cases under the LMRDA Bill of Rights. In Salzhandler v. Caputo, 316 F.2d 445 (2d Cir. 1963), the Second Circuit said, "[A]lthough libelous statements may be made the basis of civil suit between those concerned, the union may not subject a member to any disciplinary action on a finding by its governing board that such statements are libelous." Id. at 451. See also Fulton Lodge No. 2, IAM v. Nix, 415 F.2d 212, 219 n.17 (5th Cir. 1969) ("a union member or official who considers himself defamed by the statements of another member, is not preempted by the LMRDA from recourse to a civil action for defamation").

The cases cited by the protesters are consistent with this proposition. In Clark v. Esser, 821 F. Supp. 1230 (E.D. Mich. 1993), a group of IBT members who called themselves the "rank and file Teamsters" ("RAFT") sued their local union and the members of the incumbent caucus for violating their free speech rights under LMRDA. The LMRDA claim stated that a libel and slander suit by the incumbent caucus members had been filed against the RAFT group for statements made in the RAFT campaign literature warning that the incumbent caucus was going to steal votes and were engaged in embezzlement. After the election, the incumbent group failed to prosecute their libel action and it was ultimately dismissed. The RAFT group then brought their LMRDA action. In the course of denying summary judgment because of the presence of factual disputes, the District Court recognized that other courts had concluded that LMRDA does not deprive an aggrieved union officer of the common law right to sue for libel. Id., 821 F. Supp. at 1237 n.5.

Ultimately, a jury awarded the RAFT group damages for their LMRDA claim. On post-trial motions in the same case, the District Court affirmed the propriety of its jury instruction that the

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