What union lawyers say to their clients in private is off the record. But how much they bill them, and for what services, is a different story. That was the view conveyed on May 5 in U.S. District Court for the Northern District of Georgia in a case that grew out of the convictions nearly a half-decade ago of several key members of the United Transportation Union (UTU). In the new case, Warshauer v. Chao, the court ruled that the union’s designated legal counsel must file an “LM-10” employer financial report with the U.S. Department of Labor (DOL). As an employer, the counsel provides money or other things of value to the union, and thus is subject to the Labor-Management Reporting and Disclosure Act of 1959, also known as LMRDA or the Landrum-Griffin Act. In addition to filing an LM-10, this lawyer has other rules to play by.
The case has its roots in a racketeering suit covered extensively by Union Corruption Update during 2003-04. Four ex-UTU members had been indicted by a Houston federal grand jury in 2003 for acts of organized fraud going back nearly a decade. The defendants were former International Presidents Charles Little and Byron Boyd, insurance director Ralph Dennis, and insurance field representative John Rookard. In July 2004 they received prison terms, and were ordered to forfeit a combined $290,000 in proceeds. Boyd and Little allegedly used their positions to direct Dennis and Rookard to solicit and collect over $525,000 in cash payments from 34 designated legal counsels (DLCs). They used the money for union campaigns for president – Little in 1995 and 1999, Boyd in 2003 – and other special projects. The pair pleaded guilty to conspiracy to extort bribes from attorneys to become or remain a DLC, a highly coveted designation for liability lawyers pursuing federal cases.
In Warshauer v. Chao, an Atlanta-based lawyer representing the union, Michael Warshauer, sued Labor Secretary Elaine Chao in an effort to prevent her from requiring him to file an LM-10 report. He challenged the applicability of certain Web site advisory interpretations issued in 2005 and 2006 by DOL’s Office of Labor-Management Standards (OLMS) designed to provide guidance. The advisory bulletins stated that DLCs who make certain payments in excess of $250 must file Form LM-10 indicating the nature of these payments. Warshauer argued that the advisories were inapplicable since they did not follow the notice and comment rulemaking requirements of the Administrative Procedure Act. He also maintained that the advisories departed from official DOL policy.
In the end, the court wasn’t swayed. It concluded that the Web advisory bulletins were interpretative, and thus not subject to the Administrative Procedure Act. What’s more, the plaintiff failed to demonstrate the advisories had diverged from LM-10 standards. The DOL built its case on the argument that union members have a right to evaluate whether a lawyer’s presence on a list of designated counsels is based on merit as opposed to a preexisting financial relationship. Department officials are satisfied. “This decision is a victory for America’s working men and women, helping them learn who is making payments to their unions and union leaders, and is part of the department’s continuing efforts to ensure transparency and accountability required by LMRDA from employers as well as labor organizations,” said DOL Solicitor Gregory F. Jacob. Here, at least, an employee’s right to know is the trump card. (PR Newswire, 5/20/08; other sources).