- Written by Jack Humphreville
20 Sep 2011
LA WATCHDOG - On Thursday, the 2.1 million member Service Employees International Union and Sodexo USA entered into a confidential settlement agreement whereby the SEIU agreed to end its “Clean Up Sodexo” corporate campaign against the company, one of nation’s largest food services and facilities with over 120,000 employees.
In its civil lawsuit filed under the Racketeering Influenced and Corrupt Organizations Act (“RICO”) that was discussed last week in City Watch, Sodexo alleged that the SEIU engaged in an “illegal campaign of extortion” where the union and its operatives engaged in acts of “blackmail, vandalism, trespass, harassment, and lobbying law violations” in an attempt to force Sodexo to recognize the SEIU as its exclusive bargaining agent.
While the respective press releases of the SEIU and Sodexo were short and sweet and to the point, the underlying dynamics are much more complicated and far reaching than just the termination of the SEIU’s corporate campaign. (Link)
Interestingly, there was no mention of the reasons for the litigation nor, more importantly, was there any reference to the RICO statutes.
Nor was there any mention that this RICO inspired lawsuit was settled in almost record time, less than 50 days after a Federal District Court in Eastern Virginia ruled that the case may proceed under RICO because Sodexo “has stated a claim upon which relief can be had.”
Importantly, there was no discovery as the SEIU more than likely came to the bargaining table ready to concede defeat rather than expose the union and its management to damaging disclosure.
There were also financial issues, including legal fees and expenses related to extensive discovery, numerous depositions, and a long public trial that would easily approach $10 million.
And according to an East Coast SEIU insider, the SEIU executive management was petrified that the union would be subject to fines of up to $1 billion, not an unrealistic assumption since damages pursuant to RICO may be tripled.
Of greater concern was that a public trial would result in the disclosure of many documents and actions that would result in very unfavorable publicity. This would lead to many extensive legal and ethical investigations into the union’s business practices and political activities, including the conduct and actions of its officers and members. This, in turn, would jeopardize the SEIU’s reputation and relationship with numerous political entities whose employees are represented by the union.
Damaging disclosure would also make it more difficult to recruit new members as competing unions, especially in the healthcare industry, would no doubt use the negative information to “trash” the SEIU, its questionable tactics, and its management.
In other words, the SEIU “has too much dirty laundry” and “too much to lose.”
In economic terms, the upside of over $7 million in annual dues from Sodexo employees is not worth the risk of major league legal fees, triple damages, and the adverse publicity that will impact its current and future relationships with local governments, employers, and potential new members.
And where there is smoke, there is fire.
As such, a prudent City of Los Angeles needs to conduct a thorough and independent investigation of the business practices, finances, and political contributions and relationships of the SEIU and its local chapter to determine whether the SEIU is fit to represent a majority of the City’s non sworn employees.
At the same time, the City must require that the SEIU and all other City unions conduct their affairs, finances, political contributions, and contacts with City officials in an open and transparent manner.
As the City works through its financial problems, it is of paramount importance that it has the trust and confidence of the voters, especially since the voters are more than likely going to be asked to approve new taxes and fees.
And even though our Elected Elite deliberately extended the expiration of the City’s labor agreements to June 2014 so that the union negotiations would not be an election year issue, the political class needs the trust and confidence of the voters as we will go to the polls to elect a new Mayor, a new Controller, a City Attorney, and at least five new Council Members.
Tags: SEIU, Service Employees International Union, Sodexo, Los Angeles, City Council
Vol 9 Issue 75
Pub: Sept 20, 2011