Members’ Suit Alleges Michigan Bosses Misused $480,000

UAW Local 594 bosses in Pontiac, Mich., embezzled more than $480,000 to settle a sexual harassment suit against ex-president Donny G. Douglas and to pay legal bills, according to a members’ suit filed Sept. 18 in Detroit. Local 594, already the target of a federal probe over charges of illegal overtime payments and election fraud, is now accused using members’ dues without their knowledge or approval. In fact, the local entered into a confidential settlement to ensure the details of the payment would be kept secret, says Harold Dunne, the attorney who filed the suit.

Douglas, who ran Local 594 from 1981-95, was promoted in Aug. 1995. He is now a UAW servicing representative, overseeing eight UAW locals from N.J. to Wis., including Local 594.

The suit alleges officials inappropriately used union funds to pay more than $250,000 in legal fees and a $230,000 confidential settlement in the sexual harassment suit against Douglas, by a female employee, Cynthia Van Dusen. Van Dusen had a nine-year affair with Douglas, who was married; she claimed Douglas harassed her years after the affair ended and she had married.

From Nov. 1995 to Oct. 1998 the local paid four attorneys to represent the local and Douglas. The attorneys, Brady Hathaway, Terry Pawlowski, Carlton Roeser and Phillip Seymour, are also named in the suit. They are charged with legal malpractice, for allegedly aiding the embezzlement, and negligence, for allegedly failing to distance the local from Douglas in the harassment suit.

The suit also names Douglas’ successor Ron Miller and current Local 594 president Larry Trandell, among others. Trandell’s election in May 1999 is being investigated by the Dep’t of Labor.

Dunne says the use of $480,000 or more of the local’s money for Douglas’ defense is a theft of members’ money. The amount represents about one-sixth of Local 594’s annual budget. “This is plain and simple theft of union funds. It’s a breach of fiduciary duties by the officers of that local. The members’ interests were sacrificed for Douglas’ personal interests,” Dunne said. He charges that the local’s attorneys should have filed a separate suit against Douglas on the local’s behalf to protect the members, who were not responsible for his behavior. This process is known as creating a third-party defendant. “These attorneys were legally and professionally obligated to file against Douglas so the members didn’t have to pay for his defense,” Dunne said.

Dunne also represents more than 100 members of Local 594, who in Aug. filed a separate class action against Local 594, the UAW and GM alleging a 1997 strike in Pontiac was prolonged for two months while Local 594 officials tried to get illegal overtime payments and jobs for their children.

UAW bylaws appear to require membership approval of payments of the size and nature of the sexual harassment settlement and legal fees. The UAW Constitution says a local’s executive board cannot “transact any business that may affect the vital interest of the local union until approval of the membership is secured.” Several members of Local 594 argue that paying out the $480,000 without membership approval violates UAW bylaws.

“We were never asked about this suit or if we wanted to pay it. That came out of our pocket and we didn’t want to pay that,” said member Gene Austin. “That settlement and the legal fees absolutely was a vital interest of ours. It put us in jeopardy financially.”

As a result of the legal costs, Local 594 needed a $755,162 loan from the UAW in Feb. 1999 to pay delinquent dues and other money to the UAW. A UAW letter spells out that the local had been given loans of $140,000 and $615,162 to pay off past dues and a lawsuit. The $140,000 went to pay off a lawsuit filed against the local by Ulico Casualty Co., the local’s general-liability insurer. Ulico successfully argued in court that it did not have to insure Local 594 for Douglas’ harassment.

In his depositions for the Van Dusen case, Douglas admitted he kissed “50 or 60 women” at the local at various parties and social functions. He also said he touched Van Dusen on the rear years after their affair ended and she’d married.

“I touch people. I consider it a habit. I’d consider it a motivational touch. A touch of recognition. A friendly touch. I’m a motivator. I’m not a sexual harasser,” he said. He denied harassing Van Dusen and said she had a bad “mental state” and often came to him seeking his “counseling.” Van Dusen and Douglas’ affair ended in 1990, although Van Dusen continued to work in various clerical jobs at Local 594. She married attorney William Van Dusen, Jr. in Aug. 1994 and alleged that the harassment began shortly after.

Since Douglas left the local, two more complaints of sexual harassment have been lodged against Local 594 officials. Ex-bookkeeper Brenda Shead filed a complaint in July 1996 with the Mich. Dep’t of Civil Rights, and a third woman wrote a Jan. 1998 letter to UAW President Stephen Yokich complaining of sexual harassment and hostile working conditions at the local. The third woman, who did not want to be identified for fear of repercussions, was removed from her job as a benefits representative six weeks after she sent her letter. She now has a job in one of the plants. [Det. Free Press 9/19/00]