Trusteeship Illegal: $400,000 Punitive Award Upheld

The U.S. Court of Appeals for the Sixth Circuit upheld a jury’s $400,000 punitive damages award against the United Steelworkers of Am. on Apr. 18. The court ruled that USWA unlawfully imposed a trusteeship and removed the officers of Local 5644 in Toronto, Ohio. Further, the court held that the district court properly assessed compensatory damages of $9,406 against USWA plus agreed with U.S. Dist. Judge Algenon L. Marbley (S.D. Ohio, Clinton) that USWA’s actions were sufficiently “reprehensible” to warrant the jury’s large punitive award. Allegedly, the plaintiffs, Local 5644 officers Charles Argentine, Clarence Wingo, and John Gooch, were removed to silence their opposition to a USWA-negotiated collective bargaining agreement.

The court’s opinion, written by U.S. Dist. Judge Curtis L. Collier (E.D. Tenn., Clinton), sitting by designation, and joined by U.S. Cir Judge Richard F. Suhrheinrich (6th Cir., G.H.W. Bush), affirmed the district court’s holdings that USWA violated the Labor Mgmt. Reporting & Disclosure Act of 1959 by infringing the officers’ free speech rights and by imposing the trusteeship for an improper purpose. The court further upheld the district court’s decision that USWA breached its contract with the officers by imposing a trusteeship in violation of USWA’s constitution and bylaws. However, the court reversed Marbley’s grant of attorneys’ fees to the officers. U.S. Cir. Judge R. Guy Cole (6th Cir., Clinton) dissented solely on the attorneys’ fees issue.

Argentine, Wingo, and Gooch, were elected in 1994 during USWA’s negotiations with Titanium Metals Co. (a.k.a., Timet). USWA district director Jim Bowen was lead negotiator for the local. The officers openly opposed Timet’s final contract proposal presented in July 1994, and it was voted down by a large margin of members. Local 5644 then struck and Timet provided notice of prospective plant closure, conditioned on the local’s failure to make substantial contract concessions. The strike ended with an extension of the contract until May 1995. When bargaining resumed, the officers told USWA and Timet that the proposal under consideration was unacceptable to them and they would not take it back to local members for a vote.

At the same time, USWA auditors were conducting a financial investigation of Local 5644, allegedly at Bowen’s direction. An audit completed in May 1995 showed “substantial expenditures” by Argentine, Wingo, and Gooch. On Bowen’s recommendation, a trusteeship was imposed on the local and the officers were removed from office in a letter from USWA president George Becker, which made no mention of financial irregularities. Shortly after the officers were removed, a tentative agreement with Timet was reached and submitted to the membership by means of a mail ballot, not a usual practice. The agreement was accepted.

The officers received notice of a removal hearing by a USWA “factfinding commission” two days before the meeting was to be held and were not told the meeting would touch on financial matters. Their request for a postponement was denied. The “commission” recommended continuing the trusteeship. A USWA “appeals panel” upheld the report and recommended that the USWA’s executive board do the same. The executive board adopted the report as did the convention appeals committee. Having exhausted their union remedies, the officers brought suit in federal court alleging violations of the LMRDA and of the union’s constitution and bylaws.

USWA argued on appeal that even if the officers were removed to silence them, this would not be unlawful under the LMRDA’s trusteeship provisions. “A trusteeship is presumed to be valid when it is imposed for a purpose allowable under [the LMRDA] and it is imposed in a procedurally correct manner,” the court stated. Here, however, USWA engaged procedures that violated the LMRDA; as a result, the trusteeship lost its presumption of validity, and the USWA’s reasons for imposing it were open to question, the court held. Further the court said the officers presented sufficient evidence that they were removed because of their criticisms. Evidence was presented that “Bowen resented the officers’ interference with the . . . negotiations, [that he] agreed to a contract with Timet soon after [the officers] were removed, [and that he] requested an audit of [the officers].”

USWA will not appeal the Sixth Circuit’s ruling, but “will pay [the judgment] and move on,” said USWA spokesman Mel Stein.  Andrew D. Roth of Bredhoff & Kaiser, Washington, D.C., represented the USWA. Ira J. Mirkin of Green, Haines, Sgambati Company, Youngstown, Ohio, represented the officers. [BNA 4/26/02]