UHW-W Trusteeship Hearing

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UHW-W Trusteeship Hearing Powered By Docstoc
					GEORGE C. HARRIS SOMNATH RAJ CHATTERJEE JACQUELINE BOS PATRICIA SVILIK MORRISON & FOERSTER LLP 425 Market Street San Francisco, California 94105 Telephone: 415-268-7000 Facsimile: 415-268-7522 Attorneys for SEIU United Health Care Workers–West

IN RE HEARING ON WHETHER A TRUSTEE SHOULD BE APPOINTED AT SEIU UNITED HEALTHCARE WORKERS–WEST UNDER ARTICLE VIII, SECTION 7 OF THE SEIU CONSTITUTION

HEARING OFFICER: RAY MARSHALL

SEIU UNITED HEALTHCARE WORKERS – WEST’S POST-HEARING BRIEF

TABLE OF CONTENTS Page I. II. INTRODUCTION ...............................................................................................................1 BACKGROUND .................................................................................................................3 A. UHW’s Current Leadership Has an Established History in the Labor Movement and Has Built UHW into a Model Union ....................................................3 B. UHW’s Leadership Worked Successfully with International Leadership Despite Policy Differences to Rebuild Local 250 after the 1986 Kaiser Strike ..............................................................................................................................6 C. UHW Continued to Work Successfully with the International after Andy Stern Became President .................................................................................................7 D. In 2005, Local 250 Merged with Local 399 to Form UHW ..........................................9 E. Beginning Around 2005, the Policy Differences between UHW and the International Sharpened, and the International Unleashed an Unrelenting Attack on UHW .............................................................................................................9 F. G. The International Has Brought This Trusteeship Proceeding in the Context of This Political Dispute and Retaliation Campaign....................................................12 The Education Fund.....................................................................................................12 1. 2. 3. 4. 5. H. III. Creation and Purpose .......................................................................................12 Government Filings by the Education Fund ....................................................14 UHW Contributions to the Education Fund.....................................................15 Education Fund Expenditures ..........................................................................16

Education Fund Ceased to Operate Eight Months Ago at SEIU’s Request.............................................................................................................18 The Siegel & LeWitter Client Trust Account ..............................................................19

IV.

I. SEIU Convention Delegate Database ..........................................................................23 LEGAL STANDARD FOR IMPOSING A TRUSTEESHIP ...........................................25 A. The International Can Impose a Trusteeship Only if It Acts in Good Faith and Proves that a Trusteeship Is Necessary Both to Protect the Interests of the Membership and to Correct Corruption or Financial Malpractice.........................25 B. The Hearing Officer Should Recommend Against a Trusteeship if the International Is Attempting to Impose a Trusteeship in Bad Faith..............................26 C. Congress’s Intent in Passing the LMRDA Included Rooting Out Personal Corruption, Fostering Union Democracy, Enabling Locals to Choose Their Own Leaders, and Preventing International Unions from Using Trusteeships to Consolidate Power..............................................................................27 THE INTERNATIONAL HAS FAILED TO PROVE ITS CLAIMS, WHICH WOULD NOT JUSTIFY A TRUSTEESHIP IN ANY EVENT.......................................29 A. Charges 1 and 2: The Education Fund Was Established and Used for Proper Purposes and Provides No Basis for Imposition of a Trusteeship ...................29

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TABLE OF CONTENTS (continued) Page 1. 2. The Education Fund Was Created for Openly Disclosed, Legitimate Purposes.........................................................................................29

V.

All Funding of and Expenditures from the Education Fund Were Proper to the Purposes of the Fund and Made Under the Control of UHW’s Executive Board .................................................................................41 3. The Education Fund Charge Is Not Timely.....................................................50 B. Charge 3: UHW’s Deposit of $500,000 into Its Lawyer’s Client Trust Account Was Proper and Provides No Basis for a Trusteeship...................................52 C. Charge 4: UHW’s Use of a Mailing List Received from an Anonymous Source with No Stated Restriction to Communicate with Convention Attendees About Matters of Policy Debate Within SEIU Is Not a Basis to Impose a Trusteeship ...................................................................................................56 THE INTERNATIONAL PRESIDENT’S ATTEMPT TO IMPOSE A TRUSTEESHIP ON UHW IS RETALIATORY AND POLITICAL AND IN BAD FAITH ......................................................................................................................57 A. The International May Not Impose a Trusteeship in Bad Faith...................................57 B. The International Seeks to Impose a Trusteeship on UHW for the BadFaith Purpose of Stifling Dissent .................................................................................59 1. UHW Has Dissented from the International’s Policies Regarding the Direction of SEIU and SEIU’s Vision for the Labor Movement...............59 a. UHW Clashed with the International over Bargaining Strategy Regarding the California Nursing Home Alliance ................61 (i) During Renegotiations, UHW Advocated Turning Template Agreements into Full CBAs, While the International Supported Continuing the Template Agreements ..............................................................................62 (ii) The International Attempted to Force UHW’s Members to Accept the Template Agreements and Froze UHW Out of the Nursing Home Alliance Negotiations .............................................................................64 (iii) The International Attempted to Undermine UHW’s Attempts to Enter CBAs with Alliance Employers .................65 (iv) UHW Overcame Hurdles to Agreements with Alliance Employers by Threatening to Strike, a Right the International Was Willing to Give Away.................66 (v) If a Trusteeship Is Imposed, the International Will Likely Sell Out Healthcare Workers by Entering Template Agreements ..............................................................67 UHW Clashed with the International over Tort Reform .....................67

b.

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TABLE OF CONTENTS (continued) Page c. UHW Clashed with the International over Bargaining Strategy Regarding Tenet HealthCare .................................................68 UHW Dissented from the International’s Bargaining Strategy with Tenet Healthcare.............................68 (ii) The International Retaliated by Abolishing Rankand-File Participation in Bargaining........................................70 UHW Clashed with the International over Healthcare Reform in California ............................................................................70 UHW Announced Its Platform for Change to Reform SEIU ..............71 (i)

d. e. f.

2.

Sal Rosselli Resigned from the International Executive Committee to Speak Out About Undemocratic Practices Within SEIU.........................................................................................71 The International Embarked on a Campaign of Retaliation Against UHW and Its Leaders.......................................................................................72 a. The International’s Retaliation Resulted from Policy Conflicts and Began Before Sal Rosselli’s Resignation from the International Executive Committee.......................................72 By Late February of 2008, Thomas DeBruin Had Formed a Team of Senior International Staff to Wage an Anti-UHW Propaganda Campaign .........................................................................74 After Mr. DeBruin Had Begun His “Project,” the International Sent the March 24 Letter that Raised Numerous, Unsubstantiated Accusations and Threatened Trusteeship...........................................................................................75 As a Member of Mr. DeBruin’s “Project” in California, Mr. David Attempted to Organize UHW’s Members Against UHW.......................................................................................76 The International Filed Lawsuits Against UHW Regarding the Education Fund and Bombarded the Public and UHW’s Members with Misleading Publicity Regarding the Education Fund ....................................................................................76 The International Stepped Up Its Plan to Hold False Jurisdictional Hearings to Transfer UHW’s Long-Term Care Members Out of UHW ................................................................78 The International Attempted to Scuttle and Since Then Has Ignored the Vote by UHW’s Long-Term Care Members on Whether They Want to Remain in UHW.............................................79 The International’s Own Vote on Long-Term Care Jurisdiction Demonstrates the International’s Intent to Use Jurisdiction to “Implode” UHW ..........................................................81

b.

c.

d.

e.

f.

g.

h.

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TABLE OF CONTENTS (continued) Page i. The International Conducted Opposition Research Against Sal Rosselli and UHW and Formed a “Skunk Team” as Part of Its Retaliation Campaign Against UHW .........................................83 (i) The International Used Local 1199 to Conduct Opposition Research on Sal Rosselli and UHW......................83 (ii) Mr. DeBruin and His Special Project Operated as a Skunk Team to Discredit Sal Rosselli .....................................85 The International’s Rejection of a Mediator’s Proposal Demonstrates the International’s Bad Faith.........................................86 On May 1, 2008, Over 100 Labor Leaders and Academics Opposed the International’s Threatened Trusteeship, and the International Publicly Disclaimed Intention to Impose a Trusteeship...........................................................................................87 The International and Its Proxies Bombarded UHW’s Members with Anti-UHW Propaganda in Their Efforts to Implode UHW......................................................................................88 The International’s Internal Communications Demonstrate the International’s Retaliatory Motives and Plans to Destroy UHW by Any Means Necessary, Including by Imposing a Trusteeship ........................................................................90 (i) (ii) The Implosion Email Articulated the International’s Blueprint for Its Campaign to Destroy UHW ..........................90 The International Conspired with and Supported Local 6434 in Sending Information Critical of UHW ........................................................................................93

j. k.

l.

m.

n. o. p.

The International Held Meetings to Compile a List of UHW’s “Sins” .....................................................................94 (iv) Andy Stern Personally Coordinated Handing Out Anti-UHW Propaganda Through the Whips at the SEIU Convention .....................................................................94 (v) The International Promoted a Decertification Campaign Against UHW at Good Samaritan Hospital and Attempted to Undermine at Least Four Other Election Campaigns .......................................................95 The International Resurrected Its Trusteeship Plan After the Corruption in Local 6434 Became Public............................................95 The International Appointed Members of Mr. DeBruin’s Project as Monitors of UHW ...............................................................97 Tyrone Freeman and Matthew Maldonado Have Admitted the International’s Campaign to Retaliate Against UHW....................97

(iii)

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TABLE OF CONTENTS (continued) Page q. VI. Thomas DeBruin Made Numerous False Statements of Fact and Lacks Credibility...........................................................................99

TRUSTEESHIP WOULD NOT BE IN THE BEST INTERESTS OF UHW MEMBERS OR SEIU......................................................................................................105 A. A Trusteeship Will Disenfranchise UHW’s Members, Who Will Have an Opportunity to Elect UHW’s Leaders in February 2009 — with a Full Record of These Proceedings.....................................................................................106 B. C. UHW Has Been an Extraordinarily Successful Local Under Its Current Leadership..................................................................................................................107 If a Trusteeship Is Imposed, the International Will Likely Harm UHW’s Members Because Many Contracts Are Open and the International Has a Track Record of Making Sweetheart Deals ...............................................................110 Professor Lichtenstein Showed that a Trusteeship Would Not Work Here, Would Be Inconsistent with the Historical Purposes of Imposing a Trusteeship, and Would Be Contrary to the Interests of SEIU as Well as UHW ..........................................................................................................................112 Dolores Huerta Vouched for the Quality and Integrity of UHW and Its Leaders.......................................................................................................................113 Over Seventy UHW Members Testified in Support of UHW’s Leadership and Spoke Out Against the Attempt by President Stern to Put UHW in Trusteeship.................................................................................................................114 Hundreds of UHW Members Have Submitted Letters Opposing President Stern’s Attempt To Put UHW in Trusteeship ............................................................122

D.

E. F.

G. H.

VII.

More Than 80,000 UHW Members Have Signed Petitions Opposing Trusteeship.................................................................................................................127 CONCLUSION................................................................................................................128

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I.

INTRODUCTION When the Labor-Management Reporting and Disclosure Act (“LMRDA”) was enacted in

1959, international unions had often abused their trusteeship powers by imposing trusteeships to stifle dissent and obstruct democratic movements in subordinate locals whose members and officers were criticizing the international union or its officers. To address this problem, the LMRDA set standards for imposing trusteeships, which are echoed in the SEIU Constitution. See 29 U.S.C. § 462; SEIU Constitution Art. VIII, § 7(a)). Those standards are not met here. Indeed, the attempt by the SEIU International President (the “International”) to impose trusteeship on the SEIU United Healthcare Workers – West (“UHW”) is exactly the kind of abuse that the LMRDA was enacted to prevent: an international union stifling dissent by ousting the democratically-elected leaders of a local union and replacing them with its own appointed trustees. Through its democratically-elected leaders, UHW has openly disagreed with the direction in which President Andrew Stern has taken SEIU. President Stern has sought to create a topdown, corporate-style management structure through which union policy is set and bargaining is controlled from the national level. UHW advocates bottom-up, democratic member participation in union policymaking and bargaining. As testimony at the trusteeship hearing demonstrated, UHW has objected to attempts by the International to settle contracts for UHW members without the participation of those members in the bargaining process. First internally within the union and then publicly, UHW has protested what it considers undemocratic practices within SEIU. Rather than engage in constructive debate on these policy differences, the International has sought to discredit UHW and its leaders and to destroy UHW by any means available. Evidence at the trusteeship hearing demonstrated that those efforts began as a result of conflict over policy direction within SEIU, including the conduct of coordinated bargaining, long before the International made the claims put at issue by the International’s trusteeship hearing notice. By November 2007, top International leaders were holding a “war council” with their appointed

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allies at California Local 6434 to plot UHW’s demise. (Vellardita Tr. 580:17-581:22.) Those leaders and their allies proceeded with a massive publicity campaign to discredit UHW and its leaders. As revealed by a June 5, 2008 email message from one International official to others (UHW Ex. 115), replete with references to “Iraq” and a “suicide mission,” trusteeship was considered one among a number of possible strategies for accomplishing the International’s goal of removing UHW’s democratically-elected leadership. Those strategies included orchestrating the “implosion” of UHW, weakening UHW by stripping away its 65,000 long-term care (“LTC”) members through SEIU’s jurisdictional process, and filing federal litigation. The International issued its notice of a trusteeship hearing, after repeatedly denying its intention to do so, only after other plans ran into significant snags, including the exposure of rampant corruption by the International’s appointed leadership of Local 6434, the local into which the SEIU sought to move UHW’s LTC members, and the dismissal of the International’s federal court complaint based on the same alleged conduct that it now asserts as a basis for trusteeship. Paradoxically, the International relies in its attempt to impose trusteeship, on claims that UHW made improper plans to resist in the future a trusteeship imposed by the International. The International charges that UHW planned to use union funds transferred to a 501(c)(3) organization and funds transferred to a lawyer’s client trust account to continue to resist trusteeship and operate a “shadow” union in the event of trusteeship. Evidence at the trusteeship hearing showed to the contrary that: (1) the 501(c)(3) organization, the United Healthcare Workers and Patients Education Fund (the “Education Fund”), was created in May of 2007, long before the International began to threaten trusteeship, and was conceived and operated throughout according to its stated educational purposes, which included education of members and the public about the importance of democratic workplace representation; and (2) UHW and its lawyer understood and agreed throughout that in the event of trusteeship, any funds remaining in the client trust account would be under the control of the trustee. The International’s only other claim is that UHW improperly used a mailing list, which was received from an anonymous source with no stated restrictions, to communicate with SEIU convention attendees about matters

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of policy and strategy differences that had been raised at the convention and were continuing topics of debate within the union. Even if the International had proved its claims, which it decidedly has not, they would provide no basis for imposition of a trusteeship on the eve of new UHW officer elections. Trusteeship, the ultimate remedy afforded to an international union, is intended to be remedial, not punitive. It is to be imposed only when “in order to protect the interests of the membership, it is necessary to appoint a Trustee for the purpose of correcting corruption or financial malpractice . . . .” (SEIU Const., Art. VIII, § 7(a)).) As the evidence at the hearing showed, UHW is a vibrant and democratic union that has achieved extraordinary success in organizing the unorganized and in representing the interests of its members. The Education Fund, the primary basis advanced by the International for imposing trusteeship, was dissolved eight months ago at the request of the International. All of the International’s claims have now been thoroughly aired in hearings open to union members, full transcripts of which have been made available to union members. The International has also mailed notice of the charges to all UHW’s members. (UHW Ex. 139.) Election of new UHW officers is scheduled to take place in February of 2009, shortly after the Hearing Officer presents his report. (See Rosselli Tr. 906:24907:1.) Taking away the right of UHW members to choose their own officers would serve no purpose but retaliation and punishment for UHW’s open disagreement with the International over the direction of the union. II. BACKGROUND A. UHW’s Current Leadership Has an Established History in the Labor Movement and Has Built UHW into a Model Union

UHW’s predecessor, Local 250, is the oldest healthcare union in the United States and one of the first SEIU locals on the West Coast. (Borsos 9/27 Tr. 61:3-8; Rosselli Tr. 907:2-11.) Local 250 was created in the 1930s out of the San Francisco general strike, and Local 399, UHW’s other predecessor, was a prominent healthcare workers’ union from Los Angeles that

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started in the 1940s. (Borsos 9/27/2008 Tr. at 61:5-12.) UHW’s current leaders have a long and established history with the Local and with the labor movement. x Sal Rosselli joined SEIU Local 9 in the 1970s and has been president of UHW and its predecessor since 1988. (Rosselli Tr. 907:2-11, 906:11-20.) x John Borsos began working for SEIU 1199-P in 1993 after completing his Ph.D. in labor history. (Borsos 9/27 Tr. 56:3-57:4.) x Paul Kumar joined the labor movement in 1991 and worked for the International for many years. (Kumar Tr. 814:8-815:6.) x Barbara Lewis joined the labor movement around 1982 while she was a student at University of California Berkeley and later worked for the International for about 18 years. (Lewis Tr. 725:15-727:10.) x x Dan Martin has worked with UHW for about 24 years. (Martin Tr. 652:3-6.) Pamela Martinez joined the labor movement as a rank-and-file member in 1980 and has worked as a staff member since 1991. (Martinez Tr. 330:7-331:12.) x Fred Seavey joined the labor movement in 1994, after obtaining his Masters Degree. (Seavey Tr. 856:14-857:25.) x John Vellardita joined the labor movement around 1976, was the president of Local 1202 of UPIU for about 20 years, and has held many leadership positions in labor organizations. (Vellardita Tr. 528:23-531:8.) These leaders, who testified at the hearing, and many others at UHW have worked to build UHW up to what it is today. UHW has become the second-largest health care union in the United States. (UHW 9/26 Corrected Opening Stmt. 42:18-25; Borsos 9/27 Tr. 61:24-62:1.) Whereas Local 250 had about 25,000 members and about 100 contracts in 1988 (Rosselli Tr. 923:12-20), UHW now has over 150,000 members and over 200 contracts. (Id., 923:21-24; Borsos 9/27 Tr. 61:13-15, 65:21-22.) It is the fastest growing SEIU local. During the last eight years alone, UHW has organized

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75,000 new members. (UHW 9/26 Corrected Opening Stmt. 43:17-20.) In 2008, UHW organized more hospital workers than SEIU locals in all other states combined. (Id.) UHW has bargained for and obtained the best set of hospital contracts and some of the best contract standards in the United States. (Borsos 9/27 Tr. 66:1-69:21 (first healthcare union to win a defined benefit pension plan, fully employer paid health insurance, and “full voice in staffing,” allowing members to jointly determine staffing levels in hospitals; the Kaiser contract prohibits lay-offs); Rosselli Tr. 924:10-926:5 (UHW’s Kaiser contract is the top hospital workers-clinical workers contract in the country, and UHW’s Catholic Healthcare West contract is the second-best private sector hospital contract in California); Vellardita, 562:10-565:11 (recently bargained the top nursing home worker contracts in California: ties wages to Kaiser wages, code of conduct, mediation over any issue, successorship rights, health insurance, and quality-of-care committee.) Whereas seven years ago 14,000 Catholic Healthcare West workers had no union, today they have the second-best hospital workers’ contract in the United States. Kaiser Permanente’s 45,000 UHW members have the highest standards for staffing and organization rights in the United States. (Borsos 9/27 Tr. 70:17-71:17; Rosselli Tr. 925:21926:5.) The Kaiser Labor-Management Partnership — a nationally recognized cooperative relationship — is the most extraordinary example of collaboration and the best contract in the healthcare industry. (Rosselli Tr. 924:2-25, 920:11-17; see also Borsos 9/27 Tr. 69:2-21.) Over time, UHW has developed a highly successful bargaining strategy. (Borsos 9/27 Tr. 71:20-73:11.) For years, UHW synchronized its contracts to terminate in 2008, so that it could bargain as an industry in a key presidential election year. (Id., 73:12-74:13.) UHW succeeded in having contracts for over 75,000 members at 200 facilities come up for bargaining, and embarked in 2008 on an unprecedented, coordinated contract campaign. (Borsos 9/27 Tr. 71:1873:11.) Along with this bargaining and organizing success, UHW remains financially healthy. It has an annual budget of over $80 million and a strike fund of $5.5 million, and owns five buildings. (UHW 9/26 Corrected Opening Stmt. 43:17-44:25; Borsos 9/27 Tr. 65:4-20.)

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B.

UHW’s Leadership Worked Successfully with International Leadership Despite Policy Differences to Rebuild Local 250 after the 1986 Kaiser Strike

The success of UHW was years in the making. Sal Rosselli began working at UHW in the 1980s. Around 1986, after Local 250 lost a prolonged strike against Kaiser that left Local 250 in bankruptcy, the International placed Local 250 into a voluntary trusteeship. (Rosselli Tr. 907:18-908:5, 6-20.) The leadership of Local 250, including Mr. Rosselli, who directed the East Bay Region, did not oppose the trusteeship at the time. (Id., 908:6-20.) During the first six months of the trusteeship, Mr. Rosselli helped write a new Constitution and reorganized the union from geographical divisions to industry divisions. (Id., 908:14-20.) About halfway through the trusteeship, Mr. Rosselli was appointed as Director of the Hospital Division by the trustee. (Id., 908:24-909:1.) As Local 250 was emerging from the trusteeship, Mr. Rosselli announced his candidacy for President of Local 250. He ran against the incumbent trustee. The International opposed Mr. Rosselli’s candidacy. (Id., 909:15-21.) And, after Mr. Rosselli announced his candidacy, the International extended the trusteeship and put in place a new trustee, who terminated Mr. Rosselli’s employment. (Id., 909:22-910:6.) Even so, Mr. Rosselli was elected President of Local 250 in 1988. (Id., 906:16-23; David 9/26 Tr. 132:12, 23-24.) During this early period, the leadership of Local 250 under Mr. Rosselli expressed differences of opinion with the International leadership on policy issues. (Rosselli Tr. 912:1215.) These issues included the importance of rank-and-file democracy and empowering members to make decisions and have a real voice in determining the direction of their union and their relationship with employers. (Id., 912:12-21.) Shortly after Mr. Rosselli became president of Local 250, then-International President John Sweeney summoned him to a meeting in Washington, D.C., with Mr. Sweeney and Andy Stern. At the meeting, Mr. Sweeney asked if Mr. Rosselli wanted to lead Local 250 out of SEIU. (Id., 913:2-24.) Mr. Rosselli assured Mr. Sweeney that SEIU was Local 250’s Union and had been for many years and that Mr. Rosselli

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and Local 250 wanted to “work constructively with the International Union to achieve common goals of changing the lives of workers.” (Id.) In fact, despite differences on matters of union policy, Local 250 worked cooperatively and effectively with the International leadership to improve the lives of its members. Mr. Rosselli and the new leadership of Local 250 led it out of the financial difficulties caused by the Kaiser strike and the bankruptcy and began to build it into the greatly successful union that it is today. In 1991, President John Sweeney invited Mr. Rosselli to join the International Executive Board (“IEB”), and he did so. (Id., 913:25-914:10) C. UHW Continued to Work Successfully with the International after Andy Stern Became President

In 1996, Andy Stern became International President. Mr. Rosselli supported Mr. Stern’s candidacy. (Id., 915:21-25.) Although there was open debate in the early years of Mr. Stern’s term, including over Local 250’s support for the elimination of multiple salaries paid to union officials, which President Stern opposed, Local 250 worked cooperatively with Mr. Stern. (Id., 916:1-917:5.) In 1996, Mr. Stern appointed Mr. Rosselli to the SEIU President’s Committee 2000. (Id., 916:24-917:16). Over the next decade, Local 250 led a number of initiatives for President Stern. At Mr. Stern’s request, Local 250 led advocacy for the adoption of the President’s Committee New Strength Unity program at the SEIU 2000 Convention. The program called on local unions to start investing in organizing and was adopted even though it required increases in member dues by $4.40 per month for each of five years. (Id., 917:6-918:5.) At Mr. Stern’s request, Local 250 also established and led the Nursing Home Alliance to organize nursing home workers in cooperation with the International and Local 6434. (Id., 918:14-191:25.) Presidents Stern and Rosselli also joined to support the constitutional amendment for mandatory coordination in bargaining and organizing among local unions adopted at the 2004 Convention. This amendment created Unity Councils, requiring coordination by unions representing employees of the same employer and giving a significant role in negotiations to

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rank-and-file members. (Id., 920:5-921:21.) Mr. Rosselli and the UHW leadership led SEIU’s Unity Councils for Kaiser, Sutter, Tenet, and Catholic Healthcare West health systems. (Id., 921:23-922:6.) They also led the California Home Care Council, a coalition of multiple local unions in California that represent homecare workers in different counties. (Id., 922:7-17.) In 2004, Mr. Stern asked Mr. Rosselli to become an International Vice President and appointed him to the International Executive Committee. (Id., 942:14-943:1.) The International Executive Committee is a kitchen cabinet of advisers to the President. (Id., 942:17-19.) And in 2005, Mr. Rosselli was elected president of SEIU California State Council. The California State Council is the body in California that coordinates SEIU’s political action and public policy work in the state. Every SEIU California local is required to be a member. (Id., 935:5-9, 936:10-11.) UHW (and Local 250 before it) has consistently showed unity with SEIU locals outside California. Since 2005, UHW has sent dozens of staff and rank-and-file organizers to assist SEIU Locals in other states. It helped to organize Catholic Healthcare West and HCA in Nevada, and Tenet and HCA in Florida, and sent organizers to multiple states. (Id.) UHW is currently funding two full-time organizers for Local 49 in Oregon. UHW has one of the most advanced training and education programs of any local union in the country, and staff from other locals send members to California to participate. (Id., 922:18-923:11.) As an example of its commitment to unity, during the bargaining with Tenet Healthcare in 2006, at the International’s request, UHW agreed to combine its Tenet negotiations with the International to allow the International and other SEIU Locals to use the strength of workers in California to make advances outside California. (Lewis Tr. 742:10-744:21.) UHW members agreed that they would forgo negotiating pension and retiree health benefits in California if Tenet would be willing to expand organizing rights nationally. (Id., 743:4-19; Rosselli Tr. 930:14-932:10.) And, in June 2007 after months of bargaining, UHW’s elected, rank-and-file bargaining committee walked away from an excellent tentative agreement with Tenet that was about to close. (Lewis Tr. 781:13-784:14.) UHW did so because Tenet demanded that UHW sign a Labor Peace Accord that would have hindered SEIU’s ability to organize workers outside California. (Id.) UHW’s

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members refused to sign, and as a result, received lower wages and less benefits — thus sacrificing their own benefits to help win national organizing rights. (Id., 784.) D. In 2005, Local 250 Merged with Local 399 to Form UHW

Local 250 and Local 399 merged in 2005, five years after the two unions first proposed to do so and after partnering on several projects. The two unions’ executive boards had first voted to merge after the SEIU 2000 Convention, but President Stern rejected the request. (Rosselli Tr. 926:22-927:14.) President Stern challenged the two unions to increase hospital density in Southern California, particularly Los Angeles County. In four years, union density in that county increased from about 5% to 50%. (Id., 927:4-14.) The two unions also partnered at Catholic Healthcare West to increase representation from 1,000 workers in three hospitals to 14,000 workers in 28 hospitals. (Id., 925:1-20; Borsos 9/27 Tr. 70:20-7:17.) In 2004, the boards of Local 250 and 399 voted again on merging, after jointly developing a platform called “Power of One.” (UHW Ex. 2; Rosselli Tr. 927:15-19.) Over 95% of the voting rank-and-file members from each union voted in favor of the merger, and the merger proceeded. (Id., 927:20-23.) President Stern agreed to the merger. (Id., 927:15-19.) As part of the merger vote, the members of Local 399 and Local 250 elected Mr. Rosselli president of the combined union, UHW. (Id., 927:20-928:5, 906:11-23; Borsos 9/27 Tr. 62:14-64:10; UHW Ex. 2.) E. Beginning Around 2005, the Policy Differences between UHW and the International Sharpened, and the International Unleashed an Unrelenting Attack on UHW

Even though UHW was able to work successfully with the International, in and around 2005, the policy differences between UHW and the International became more focused. UHW and the International began to clash pointedly around bargaining strategy, growth strategy, union democracy, healthcare reform, and other matters. (See, e.g., UHW Exs. 217, 218, and 238.) John Borsos succinctly described the differences: [T]here are competing visions of what the labor movement should look like. Our vision is a democratically-led, rank-and-file controlled, labor movement, in which members are empowered to make decisions about their working conditions and about their

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union. And, in contrast, is a vision that’s been put forward by Andy Stern, the president of SEIU, that decisions are made in a much more centralized top-down way. ... From our perspective, standards and growth can happen, simultaneously; in fact, they’re part and parcel of — they’re a part of — to win — to be able to achieve growth, you have to be able to win standards. You can’t achieve one without the other. What we’ve seen in SEIU is a drive of growth at all costs to the detriment of standards and we believe, ultimately, to the detriment of growth. (Borsos 9/27 Tr. 97:23-98:19.) International representatives have recognized these policy differences. Thomas DeBruin prepared an October 9, 2007 memo that discussed areas of disagreement between the International and UHW. Mr. DeBruin’s memo quoted a section from UHW’s program that described UHW’s priorities: THE SIX INGREDIENTS FOR PROGRESS x x x x x x Member democracy is fundamental to our strength and our success Organizing and achieving high standards must go hand in hand Politics must be integrated into everything we do Employer relationships must be created from a position of strength Success requires a willingness to struggle, and an ability to fight when necessary One industry, one standard, one union

(International President Exhibit (“Int’l Ex.”) 126.) Mr. DeBruin then wrote: “It seems to me that your program does not challenge your members on the single most important issue facing us all – putting the vast majority of our time, energy, thought, resources, and focus on figuring out how to grow outside of where we’re strong today.” (Id.; compare UHW Ex. 217 with Ex. 218.) The International described the difference between UHW and the International as “a clash of paradigms.” (DeBruin Tr. 1267:15-22; see UHW Ex. 217.)

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These differences articulated by Mr. Borsos and Mr. DeBruin have emerged sharply at a number of flashpoints since 2005. They include the strategy regarding the Nursing Home Alliance that John Vellardita described in detail at the trusteeship hearing (Vellardita Tr. 534:18564:5), the bargaining strategy regarding Tenet Health Care described by Barbara Lewis (Lewis Tr. 741:21-765:8; also Borsos 9/27 Tr. 91:14-20, 93:19-94:6), and California healthcare reform described by Paul Kumar. (Kumar Tr. 815:25-846:10.) In these areas, and others, UHW has opposed the International’s agenda and voiced its dissent vigorously. (See Lewis Tr. 773:12774:2.) In response to UHW’s expression of its disagreement, the International has unleashed a massive retaliation campaign against UHW on multiple fronts. This campaign was well underway in 2007 before any of the allegations against UHW that led to this hearing. (See UHW Exs. 16 and 44.) Tyrone Freeman and Matthew Maldonado admitted to UHW that, by November 2007, International leaders formed a “war council” to map out plans to attack and to discredit UHW. (Vellardita Tr. 579:21-581:22.) That “war council” included Andy Stern, Anna Burger, Stephen Lerner, Matthew Maldonado, Tyrone Freeman, and others. (Id. 579:21-581:22.) Thomas DeBruin admitted that he became a “Campaign Program Manager” of a team — approved by Anna Burger — to carry out a project to wage a “vigorous campaign” against UHW. (DeBruin Tr. 1224:9-1226:6.) Mr. DeBruin admitted that his project unleashed flyers that mocked UHW with phrases such as “UHW’s Hypocrisy on Democracy” and other coordinated activities against UHW. (Id., 1350:16-1352:9, 1350-52; UHW Ex. 232.) As the evidence showed and as discussed in more detail below (see Section V(B)(2)), the retaliation campaign included: removing Sal Rosselli from his position as president of the SEIU State Council; initiating jurisdictional hearings to remove 65,000 long-term care members from UHW; an unrelenting barrage of telephone calls, email blasts, and flyers with false, misleading, and inflammatory statements against UHW; attempts to organize UHW’s members against UHW; circulating false allegations against UHW among UHW’s members; and other matters.

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F.

The International Has Brought This Trusteeship Proceeding in the Context of This Political Dispute and Retaliation Campaign

It is in the context of this political dispute and the resulting retaliation that on March 24, 2008, the International first raised issues regarding the Education Fund and other unsubstantiated allegations. (UHW Ex. 59.) And, it is in this same context that the International has brought charges in an attempt to impose a trusteeship. The International’s own internal email prepared on June 5, 2008, states: “Trusteeship would be difficult . . . Implosion would be a better outcome.” (UHW Ex. 115.) Indeed, the evidence is overwhelming that this trusteeship proceeding is simply another weapon in the International’s campaign of retaliation against UHW. G. The Education Fund 1. Creation and Purpose

The United Healthcare Workers and Patients Education Fund (the “Education Fund”) was created at the May 18-19, 2007 UHW Executive Board Meeting. (UHW Ex. 14.) The resolution to create the Education Fund was voted on in open session and was passed unanimously. (Borsos 11/12 Tr. 125:25-126:20; Brennan Tr. 299:5-9.) The more than 80 Executive Board members who attended the meeting, approve[d] up to $6 Million to the newly created non-profit United Healthcare Workers and Patients Education Fund to provide education to healthcare workers and patients concerning issues related to the healthcare crises, as well as other issues of importance to healthcare workers and their patients. (UHW Ex. 14.) Members who attended the meeting recall discussing that the fund could be used in 2008 to educate members and the community about healthcare issues in relation to (1) legislative attempts to create comprehensive healthcare reform in California, (2) the presidential election campaign, and (3) UHW’s coordinated contract campaign. (Borsos 9/27 Tr. 73:12-76:24, 78:279:4; Lewis Tr. 728:25-730:14; Martin Tr. 653:7-19; Martinez Tr. 332:17-333:12; Brennan Tr. 298:11-299:24; York-Jones Tr. 312:14-313:25.)

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For example, Helen York-Jones, a rank-and-file member of the Executive Board, recalls that the Education Fund was to “provide education to the healthcare workers and to the rank-andfile members for the upcoming reform of the healthcare crisis” in California and for the upcoming election. (York-Jones Tr. 313:10-14.) William Brennan, another rank-and-file member, recalls that the healthcare crisis was discussed and that members and the community needed to get involved with the healthcare reform bill in the California legislature. (Brennan Tr. 299:10-24.) Pamela Martinez recalled that Executive Board members were discussing “healthcare reform in California in 2008, and we were talking about our 2008 contract campaign with acute care hospitals and nursing homes, and how we really hoped to get them all together and try to move healthcare reform . . . we wanted to work with community groups and other labor unions.” (Martinez Tr. 333:2-12.) The purpose of the Education Fund was also to educate healthcare workers and consumers of healthcare about the fundamental relationship between union democracy and the accomplishment of quality healthcare reform. (Rosselli 11/14 Tr. 948:10-15.) UHW Executive Board members explained that union democracy and the workers’ voice in contract bargaining go hand-in-hand with accomplishing comprehensive healthcare reform. Healthcare workers are the last line of defense between the healthcare industry making decisions based on the bottom line versus making decisions based on quality patient care, and this is an issue that affects not only UHW members but the communities and patients they serve. (Id., 948:10-949:21; Martin Tr. 654:10-21.) The purpose of forming the Education Fund as a 501(c)(3) organization was to allow for contributions by allies who shared UHW’s vision of achieving universal access to quality healthcare and enabling healthcare workers to have a real voice about work conditions affecting patient care. (Rosselli Tr. 950:1-951:13; Lewis Tr. 729:5-730:14; Martin Tr. 654:25-655:8.) Rosselli’s vision was to achieve the same kind of success with the Education Fund that the Shirley Ware Education Fund, another 501(c)(3) organization established by UHW in 1998, had achieved. (Rosselli Tr. 950:1-951:13.) In just a few years, the Shirley Ware Education Fund had

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accessed government grants to develop a training program for healthcare workers and had coordinated with an employer-negotiated Taft-Hartley training and upgrade fund. (Id.) During the discussion about creating the Education Fund, and thereafter, there was no mention by Mr. Rosselli or anyone else that the Fund was being created to put funds outside the reach of a trustee in case of a trusteeship. (Brennan Tr. 300:15-303:2; Martin Tr. 655:9-16; York-Jones Tr. 314:1-24; Martinez Tr. 333:13-334:7, 348:25-349:4; Lewis Tr. 15-25; Borsos 9/27 Tr. 79:8-15; Rosselli Tr. 1031:1-6.) At the May 18-19, 2007 Executive Board meeting, all members who volunteered became members of the Education Fund board. (Martin Tr. 655:17-22; York-Jones Tr. 314:25-315:13; Borsos 9/27 Tr. 80:6-13.) Seven of the ten Education Fund directors are rank-and-file members of UHW. (See UHW Ex. 28 (Articles of Incorporation, at last page, list the seven rank-and-file board members – David Shapiro, Lori Whyman, Stan Lyles, Nancy Evans, Martha Vasquez, Rosie Byers, and Roy Chaffee.).) After Executive Board minutes are approved, they are disseminated to the Executive Board members and union staff. (Borsos 11/12 Tr. 194:17-195:14.) Board members take the approved minutes back to the Steward Council meetings in their facilities, discuss what happened at the Executive Board meeting, hand out copies of the minutes, and answer questions from the stewards or other members. (Id., 194:17-195:14; Brennan Tr. 303:6-12; York-Jones Tr. 315:19-316:1.) The decision to create the Education Fund was memorialized in the May 2007 minutes and publicized to union members, according to the customary practice. Rank-and-file Executive Board Members did not hear objections about the creation of the Education Fund when they discussed it with their members. (Brennan Tr. 303:14-304:5.) 2. Government Filings by the Education Fund

The Articles of Incorporation of the Education Fund contain a brief description of its purpose: “to educate the public, patients, and Union members with respect to healthcare issues.” (UHW Ex. 28, Articles of Incorporation of United Healthcare Workers and Patients Education

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Fund.) The IRS Form 1023 application for tax-exempt status includes a more complete description, with a “Narrative of Activities,” which states: This non-profit educational organization expects that it will emphasize in educational material the importance of the full and open and democratic labor organizations in addressing and solving the current healthcare crisis. This organization expects to emphasize the full inclusion and involvement of health care workers in addressing the crisis, to be achieved by full democratic participation of these health care workers in making decisions concerning every aspect of how and when health care is provided to patients, and under what conditions. (UHW Ex. 28, Form 1023, Part IV, Narrative Description of Activities.) UHW filed its IRS Form 1023 application for tax-exempt status on November 26, 2007. (UHW Ex. 28.) The IRS approved that application on March 24, 2008. (UHW Ex. 183.) In the IRS Form 1023, the Education Fund disclosed that it was under common control with UHW. (UHW Ex. 28, Form 1023, parts V.2.a and V.3; Harmon Tr. 425:17-427:21; Kupperberg Tr. 513:3-517:11; Trister Tr. 645:22-647:17; Rosselli Tr. 964:5-965:11.) Part V.2.a states that the board members of the Education Fund are selected from the Executive Board of UHW. (UHW Ex. 28; Harmon Tr. 425:17-426:9; Trister Tr. 646:10-647:13.) 3. UHW Contributions to the Education Fund

The IRS Form 1023 contains a chart with projected contributions over a four-year period. (UHW Ex. 28, Form 1023, part IX; Rosselli Tr. 957:12-958:7.) It projects contributions to the Education Fund of $1 million per year for each of the years 2007-2010, for a total of $4 million. (UHW Ex. 28, Form 1023, part IX; Rosselli Tr. 957:13-958:9.) In fact, UHW contributed $1 million in 2007 and $2 million in 2008 to the Education Fund. (See UHW Ex.19; Int’l Ex. 9; Rosselli Tr. 957:13-958:25.) UHW’s May 2007 contribution of $1 million to the Education Fund represented only 1.5% of total UHW revenues and less than 2% of expenditures. (Kupperberg Tr. 518:4-19.) During 2007, UHW’s net assets increased by almost $5 million. (Id.) Though audited financial statements are not yet available for 2008, the $2 million

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contributed in 2008 also represented a very small percentage of UHW’s revenues and expenditures. 4. Education Fund Expenditures

The Education Fund’s expenditures totaled approximately $122,000, and every penny spent by the Education Fund has been accounted for. (See UHW Ex. 167; Hauptman 9/26 Tr. 90:21-91:4; UHW Ex. 98-C; Martin Tr. 657:5-12.) After formal review and audit, the International found no UHW money spent for personal purposes or for non-union business, either through the Education Fund or otherwise. (Hauptman 9/26 Tr. 97:19-98:18, 116:6-13.) In fact, the International’s counsel concedes that there is “no allegation in this proceeding that money was spent for personal purposes.” (Int’l 9/26 Opening Stmt. 98:1-3.) The first board meeting of the Education Fund was on August 7, 2007. (Int’l Ex. 4.) At that meeting, the Board members directed legal counsel to prepare and file the necessary forms with the government to obtain tax-exempt status. (Id.) The Education Fund paid the Weinberg law firm about $1,900 in filing fees and for legal services necessary to establish the organization. (UHW Ex. 167; Martin Tr. 663:14-664:5.) At the first Education Fund Board meeting, Board Members also unanimously voted to authorize the hiring of a media consultant, Edward Garvey, “to publicize the work we are doing on behalf of members, patients, and the community with respect to healthcare.” (Martin Tr. 657:13-659:5; Int’l Ex. 4.) Garvey is a prominent, progressive media consultant. His work included arranging a presentation and speech about healthcare reform and union democracy, given by UHW president Sal Rosselli at the “Fighting Bob Fest” on Sept. 8, 2007. (Martin Tr. 659:9-662:12; UHW Ex. 21, UHW Ex. 25-A.) The Education Fund paid Garvey $28,260 for his consulting work. (UHW Ex. 167; Martin Tr. 657:9-17.) The Education Fund also retained Arthur Fox for legal and consulting services in February and March of 2008. (Martin Tr. 664:7-14.) Mr. Fox is a nationally-acknowledged expert on union democracy issues, which were directly related to the anticipated work of the

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Education Fund. (Id., 664:15-665:1.) The Education Fund originally approved a $75,000 retainer to Mr. Fox at the February 9, 2008 Education Fund board meeting, but he returned $52,000 of the retainer after the Education Fund ceased operations. (Id., 720:17-25.) The Education Fund also approved up to $225,000 for materials, postage, phone banking, and translation costs related to an election that would give UHW long-term care workers an opportunity to voice their preference on whether to remain in an integrated healthcare union or join a separate, long-term care union. (Int’l Ex. 9; Martin Tr. 667:11-668:18.) Ultimately, the Education Fund determined that it was not appropriate to fund the election itself, but that the Education Fund would send out an informational mailer publishing the results of that election. (Martin Tr. 667:11-668:18; Int’l Ex. 19.) About $50,000 was spent on postage. (UHW Ex. 167.) The Education Fund paid for various office equipment expenses, including the purchase of computers, printers, cables, and telephones, and paid $495 to an IT consultant to set up computers and printers. (Martin Tr. 665:2-25; UHW Ex. 167.) It was anticipated that the Education Fund would need this office equipment to operate. (Martin Tr. 665:2-25; Hauptman 9/26 Tr. 113:2-9.) Included in theses expenses was the purchase of 100 cell phones for the purpose of phone-banking advocacy with members in the field, referred to as “phones-in-a-box.” (Martin Tr. 666:1-11; Hauptman 11/12 Tr. 113:13-22.) Phyllis Willett, a UHW staff member, assisted Dan Martin in buying much of this equipment, and the Education Fund reimbursed her. (Martin Tr. 703:19-704:6; Int’l Ex. 15.) In the process of setting up operations, the Education Fund sought donations of office furniture and other equipment. (Martin Tr. 668:19-669:7.) In order to have a place to store such items until the Fund got up and running, the Education Fund spent $317 for storage in Oakland. (Id.; Hauptman 9/26 Tr. 114:4-11; UHW Ex. 167.) Shortly after the Education Fund was established in 2007, the California Nurses Foundation, a 501(c)(3) organization, offered free office space for the Education Fund to use; however, the Education Fund never actually occupied the space. (Rosselli Tr. 1022:7-24; Martin Tr. 685:17-687:10, 723:12-18; UHW Ex. 212.) UHW’s relationship with CNA, one of the funders of the California Nurses Foundation, has

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always been a rollercoaster – sometimes the relationship was cooperative and other times it was competitive. (Rosselli, 1022:7-24, 1024:11-25; Martin; 685:17-687:10, 723:12-18; UHW Ex. 212.) At the time the space was offered, the relationship was good; however, it subsequently deteriorated, and the Education Fund never moved in or used the space. (Rosselli Tr. 1025:11028:7 (UHW offered to help fight a CNA raid in Las Vegas, and UHW strongly supported Local 1199 in Ohio, which was fighting off CNA opposition to an organizing drive at Catholic Health Partners).) During the months that it operated, the Education Fund did not solicit funds from outside donors since the IRS had not approved its application for tax-exempt status. (Borsos 11/12 Tr. 184:6-23; UHW Ex. 183.) Because the Education Fund could not solicit donations until it received tax-exempt status, it also did not make sense to publicize the Education Fund prior to that time. (Borsos 11/12 Tr. 184:3-23.) 5. Education Fund Ceased to Operate Eight Months Ago at SEIU’s Request

At the time it was created, the Education Fund expected to be involved in conferences, research papers, and other activities. (UHW Ex. 28, at Part IV, Narrative Description of Activities.) Most of these anticipated activities had not yet been undertaken, however, when the controversy with the International over the Education Fund began. (Rosselli Tr. 962:19-963:11; Borsos 9/27 Tr. 84:13-23; 171:19-172:11; UHW Ex. 28; see also Martin Tr. 723:12-18.) The same day the Education Fund received approval of its 501(c)(3) status from the IRS, the International sent a letter to UHW that was understood as threatening trusteeship due, in part, to objections over the creation of the Education Fund. (UHW Ex. 183; UHW Ex. 59; Borsos 11/12 Tr. 163:7-22; 169:13-20, 183:17-184:23.) In an April 7, 2008 letter, the International requested that UHW refrain from making further contributions to the Education Fund, and that the Education Fund stop making expenditures. (UHW Ex. 184.) After an emergency meeting on April 10, 2008, the Education Fund’s board resolved to provide all records requested by the International and to voluntarily

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refrain from any further expenditures of funds, in order “to allow for an orderly resolution of the concerns expressed by Mr. Stern.” (UHW Ex. 80; Borsos 11/12 Tr. 153:2-154:4; Martin Tr. 669:12-670:9; 722:22-723:7.) As of April 21, 2008, the International had copies of all of the checks written by the Education Fund. (Hauptman 9/26 Tr. 94:13-96:14; see UHW Ex. 92.) At the request and demand of the International, on April 24, 2008 the UHW Executive Board requested that the Education Fund return unspent funds to UHW because “the political landscape [with regard to an anticipated healthcare initiative] has now changed markedly,” and because “the establishment of the Fund has become a source of unnecessary conflict between UHW-W and the SEIU International diverting attention from [UHW’s] mission of promoting the interests and welfare of the UHW-W membership by all means possible.” (UHW Ex. 95; UHW Ex. 97.) On the same day, the Education Fund board unanimously resolved to begin the process of winding down and transferring all unspent funds and assets to UHW, retaining only sufficient funds necessary to go out of business. (UHW Ex. 96; Rosselli Tr. 966:3-5; Martin Tr. 723:8-11.) On April 28, 2008, UHW notified Stern by email that the Education Fund would return all unspent funds and assets to UHW, and enclosed copies of the April 24 board resolutions. (UHW Ex. 98.) The following day, SEIU filed a federal lawsuit against the officers of UHW, based on allegations regarding the Education Fund. (SEIU v. Rosselli, No. 08-02777 (C.D. Cal. Apr. 29, 2008).) On that day, April 29, 2008, UHW received $2,801,425.48 from the Education Fund. (Int’l Ex. 45; Martin Tr. 723:25-23.) On May 30, 2008, the Education Fund returned another $122,700.00 and also turned over office equipment valued at $15,668.66. (Int’l Ex. 45; Martin Tr. 723:25-23.) As of June 10, 2008, the Education Fund had returned a total of $2,939,794.14 to UHW. (Int’l Ex. 45.) UHW has placed these funds, which represent all unused cash and assets of the Education Fund, into a separate UHW account. (Rosselli Tr. 966:3-5; UHW Ex. 96; Hauptman 9/26 Tr. 102:11-14; Martin Tr. 722:11-14, 724:2-23.) H. The Siegel & LeWitter Client Trust Account

The UHW Executive Board, at a meeting on March 7-8, 2008, voted unanimously

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to approve immediate payment to Siegel and LeWitter of Oakland California of up to five hundred thousand dollars to be placed in its client trust account, to be billed against pursuant to a retainer agreement with the firm to the greatest extent allowed by law in order to provide any and all legal defense of the membership and officers of UHW from any attempt by any other labor organization or individual(s) to deprive UHW of any of its members and/or of its democratic independence and/or its lawful rights of free speech by imposition of an illegal trusteeship, or otherwise to deprive it of its right to be governed by the officers the members democratically elected in the last UHW officers’ election. (UHW Ex. 53, at 4.) Over 70 Executive Board members were present at that meeting. (Id., at 1.) UHW board members decided to retain the Siegel firm because they were extremely upset about the actions of the International against UHW, which included using their own union dues to pay for an onslaught of phone calls, mailings, and emails to UHW members from the International and Local 6434, all targeted at discrediting UHW. (Rosselli Tr. 969:24-970:8; 1029:23-1030:1.) At the meeting, Sal Rosselli recommended authorizing up to $250,000 to be placed in the client trust account at the Siegel firm, but Tony Aidukas, a rank-and-file board member, stood up and said, “[T]hat’s not enough. Litigation is expensive — let’s make it $500,000.” (Id., 970:9-971:3.) In March of 2008, UHW anticipated significant litigation to protect its rights and the free speech rights of its members, and to defend against retaliation by the International for the exercise of those rights. (Id., 970:3-971:23.)1 UHW transferred $25,000 and then another $475,000 to the Siegel firm’s client trust account in mid- and late March, respectively. (Id., 971:10-23.) At the time of the second transfer, the Siegel firm was preparing a Title I LMRDA lawsuit against the International and three of its officers. This suit was filed on April 8, 2008. (Int’l Ex. “Litigation”, pp. 624-37; Rosselli Tr. 971:24-972:1; Siegel Tr. 805:19-25.) Also at that time, through President Stern’s March 24, 2008 letter and through its continuing, massive

Indeed, SEIU monitor Bob Hauptman acknowledged that litigation can “certainly” be expensive and that UHW “certainly” has a right to engage legal counsel to represent its interests, to defend against trusteeship, and to protect the rights of its members under the LMRDA. (Hauptman Tr. 64:21-65:6, 74:20-24.)

1

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retaliation campaign against UHW, the International had made clear that it would do anything that it could to threaten the existence of UHW. The retainer agreement with the Siegel & LeWitter firm provides that UHW will maintain a minimum balance of $25,000 in the client trust account, and that the Siegel firm will hold this amount in trust until it is earned. (Siegel Tr. 788:21-789:9; 793:17-21.) In order for the Siegel firm to withdraw payment from the client trust account, it must issue a monthly bill to UHW for services performed. (Id., 789:23-790:13; Hauptman 11/12 Tr. 69:17-70:12.) Under the retainer agreement, UHW is the client; therefore, whoever has authority to speak for UHW controls the client relationship and the funds in the client trust account. (Rosselli Tr. 975:4-9; Siegel Tr. 788:8-9, 797:4-8.) The agreement specifically provides that if the firm’s services are terminated for any reason, the firm shall send UHW any unearned money in the trust account. (Siegel Tr. 796:15-797:3; Rosselli Tr. 972:23-973:12; UHW Ex. 180, § B.2.) If a trusteeship were imposed, the trustee would control UHW and the funds in the client trust account. (Siegel Tr. 796:15-797:21; Hauptman 11/12 Tr. 72:22-73:6.) As stipulated by the authorizing resolution of the UHW Executive Board, funds in the client trust account can be used to pay for legal representation only “to the greatest extent allowed by law.” (UHW Ex. 53, at 4; Siegel Tr. 794:16-21.) The retainer agreement provides that the Siegel firm will provide services to UHW, including possible litigation services and counseling concerning internal union governance matters, issues relating to the relationship between the union and its international parent or other subordinate bodies of the SEIU, and any other union business matters. (Siegel, 787:14-788:3; 794:16-21.) Amounts paid to the Siegel firm from the client trust account have been solely for legal services provided to UHW. (Id., 794:16-796:14.) Those services have included advice regarding the conduct of various aspects of union business and the conduct of federal litigation against the International and its officers for the purpose of vindicating the rights of UHW members to free speech and equal participation in the affairs of the union under Title I of the LMRDA. Despite the fact that the International has filed two lawsuits against UHW officers, none of the money in the client trust account, or from

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any UHW funds, has been used to pay for the defense of these officers, or for any purpose other than representing the interests of UHW. (Id., 794:22-796:14; Hauptman 11/12 Tr. 65:18-66:14.) See SEIU v. Rosselli, No. CV-08-3330 (C.D. Cal.); Collins v. Rosselli, No. CV-08-02777 (C.D. Cal.). In a March 24, 2008 letter to Mr. Rosselli, International President Andy Stern requested that UHW [f]or the time period of September 1, 2007, to date, please provide copies of all minutes of meetings of the UHW-W local union executive board (including any action taken during executive sessions) and copies of all financial records showing the transfer of money in excess of $10,000 from the local union during this period. (UHW Ex. 59, at 4.) Mr. Stern’s March 24 letter stated further that “[t]his documentation should be provided to my office no later than close of business March 27, 2008.” (Id.) UHW complied with this request and sent the requested documents to President Stern within the three-day deadline. (Int’l Ex. 21.) Legal counsel for UHW also sent copies of the requested Executive Board minutes to legal counsel for the International on March 31, 2008. (Int’l Ex. 24.) The Executive Board minutes sent to the International on March 27 and March 31, 2008, did not include the minutes of the March 7-8, 2008 Executive Board meeting because those minutes had not yet been prepared. As is UHW’s customary practice, draft minutes are created after each board meeting; they are then circulated and revised and presented at the following board meeting for approval. (Rogers Tr. 367:13-18; Martinez Tr. 334:8-23.) Once they are approved, Natashia Rogers, a UHW Administrative Assistant, creates the actual “minutes,” which are final. (Rogers Tr. 367:23-368:4; Martinez Tr. 338:23-339:8.) Following this procedure, the draft minutes of the March 7-8, 2008 meeting were approved at the subsequent Executive Board meeting on March 29, 2008, and the actual minutes were created by Ms. Rogers on April 1, 2008. (Rogers Tr. 368:24-371:6; UHW Ex. 179; UHW Ex. 64.) UHW had notified the International of all of its regularly scheduled 2008 Executive Board meetings at the start of the year. UHW produces an annual calendar that lists all UHW

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board meetings and distributes this calendar to officers of the International and all UHW members. (Martinez Tr. 340:1-341:25; Rogers Tr. 385:12-386:4; UHW Ex. 208.) The 2008 UHW Calendar that was sent to International officers includes announcement of the March 7-8, 2008 Executive Board meeting. (UHW Ex. 208.) I. SEIU Convention Delegate Database

After the 2008 SEIU Convention, which was held on June 1-4, 2008, in Puerto Rico, a UHW staff member received an email with a spreadsheet attached to it. (Borsos 11/12 Tr. 205:725) The sender was anonymous, and the sender’s email address provided no identity. (Id.) The spreadsheet contained a database with names, addresses, and phone numbers of people who it seemed might have attended the SEIU Convention, but it was not clear exactly what the database was. (Borsos 11/12 Tr. 205:7- 208:13; 287:15-21.) The database was not labeled as a convention list. (Id., 207:2-3.) It did not refer to Opus Solutions, was not password-protected, and did not contain any indication that the information was proprietary or restricted. (Id., 206:722.) The staff member forwarded this message to John Borsos, who directed that the database information be merged into a larger mailing database. (Id., 207:23-208:4; 281:17-21; 284:1-3; Borsos 9/27 Tr. 57:12-15.) UHW sent mailings in the summer of 2008 to the merged database regarding ongoing matters of policy debate within the SEIU, and matters that had been subjects of discussion at the Convention, including rank-and-file member participation, healthcare reform, and long-term care jurisdiction. (Hauptman 11/12 Tr. 85:1-86:10; Int’l Ex. 50; Int’l Ex. 47.) UHW received no personal complaints from anyone who received these mailings; however, it did receive complaint letters from the International. (Borsos 11/12 Tr. 208:5-13.) Local unions are required to give their membership lists to the International. (Hauptman 11/12 Tr. 41:24-42:7.) Beginning in late February of 2008, UHW members were inundated with emails, mailings, telephone calls, and surveys to their homes, personal cell phones, and personal email addresses. (Borsos 11/12 Tr. 208:25-209:18; Vellardita Tr. 570:2-571:9.) These

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communications came from Local 6434 in Southern California, Local 1199 in Ohio-KentuckyWest Virginia, and Local 775 in Washington, as well as the International. (Borsos 11/12 Tr. 209:12-18.) Members received calls from Michigan, New York, and Florida. (Id.) Some of the callers said that they were authorized to make the calls by “your union,” but UHW never authorized these calls. (Id., 209:19-210:19.) The callers purported to be taking polls and surveys, and asked divisive questions like, “how would you feel if you found out the union had stolen $6M of your money?” (Id., 209:6-210:14, 237:17-239:8.) At least 600-700 members received re-routed phone calls that falsely showed UHW’s Oakland office phone number on their Caller I.D. (Vellardita Tr. 570:1-571:9.) Members testified about these calls from the International. (See e.g., John Schwartz 11/27 Tr. 278:18-20. (“Where’s Andy Stern? He’s not here. He’s accusing us, he’s calling us, and mailing us, all these accusations, using our union dues. . .”); Martha Vazquez, id., 242:17-19 (“you have robo-calls coming to me making these accusations to me without any proof”). After receiving many complaints from its members, UHW in turn complained to International President Andy Stern and the heads of other locals who were contacting members, including Tyrone Freeman, President of Local 6434. (See UHW Exs. 84; UHW Ex. 86; Borsos 11/12 Tr. 237:17-239:8.) UHW asked that this unauthorized correspondence and campaign of misinformation cease, and charged that the conduct was a “violation of the privacy rights of our membership.” (UHW Ex. 86; Borsos 11/12 Tr. 212:14-20.) President Stern rejected that request and stated that granting that request “would suppress free speech rights and prevent UHW members from hearing ideas that differ . . .” (UHW Ex. 89; Borsos 11/12 Tr. 213:11-214:17.) When a UHW Executive Board member raised this issue again at the SEIU Convention — asking President Stern what he called the massive emailings, letters and phone calls from one local union to another — Stern answered, “That’s democracy.” (Borsos 11/12 Tr. 214:25215:18.) UHW took President Stern’s statement “as a wholesale endorsement of our local union having the right to communicate with leaders and other members of other local unions. We

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heard it from the podium of the highest decision-making body of the International Union.” (Borsos 11/12 Tr. 215:14-18.) III. LEGAL STANDARD FOR IMPOSING A TRUSTEESHIP A. The International Can Impose a Trusteeship Only if It Acts in Good Faith and Proves that a Trusteeship Is Necessary Both to Protect the Interests of the Membership and to Correct Corruption or Financial Malpractice

The Landrum-Griffin Act (the LMRDA) places legal limits on an international labor organization’s ability to impose a trusteeship on a local union: Trusteeships shall be established and administered by a labor organization over a subordinate body only in accordance with the constitution and bylaws of the organization which has assumed trusteeship over the subordinate body and for the purpose of correcting corruption or financial malpractice, assuring the performance of collective bargaining agreements or other duties of a bargaining representative, restoring democratic procedures, or otherwise carrying out the legitimate objects of such labor organization. 29 U.S.C. § 462 (emphasis added); see Benda v. Grand Lodge of the Int’l Ass’n of Machinists & Aerospace Workers, 584 F.2d 308, 312 (9th Cir. 1978) (primary approach of the LMRDA is to limit the purposes for which trusteeship can be established). The SEIU Constitution tracks the language of Section 462 of the LMRDA and provides further limitations. Article VIII, section 7(a), of the Constitution provides: Whenever the International President has reason to believe that, in order to protect the interests of the membership, it is necessary to appoint a Trustee for the purpose of correcting corruption or financial malpractice, assuring the performance of collective bargaining agreements or other duties of a bargaining representative, restoring democratic procedures, or otherwise carrying out the legitimate objects of this International Union, he or she may appoint such Trustee to take full charge and control of the affairs of a Local Union . . . . (Art. VIII, § 7(a) (emphasis added).)2 Accordingly, the International bears the burden of showing that a trusteeship is “necessary” “to protect the interests” of UHW’s membership and There are no allegations in this action that UHW failed to perform under a collective bargaining agreement (“CBA”), usurped democratic procedures, or otherwise failed to carry out legitimate objects of the union (as interpreted by federal law). (Rothner 9/26 Tr. 69:23 -70:3
(Footnote continues on next page.)
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“correct[ ] corruption or financial malpractice” (or for other purposes not at issue here). Absent that showing, under the SEIU Constitution, the analysis should end; and the Hearing Officer should recommend against appointing a trustee. B. The Hearing Officer Should Recommend Against a Trusteeship if the International Is Attempting to Impose a Trusteeship in Bad Faith

Federal law places another limitation on an international’s ability to impose trusteeships. An international’s imposition of a trusteeship is invalid if the trusteeship was not established or maintained in good faith for a purpose allowable under the LMRDA. See, e.g., Benda, 584 F.2d at 316. Courts have repeatedly demonstrated their willingness to remove trusteeships imposed in bad faith or without appropriate procedures. For example, in United Brothers of Carpenters and Joiners v. Dale, the court refused to enforce a trusteeship where the parent union officials had conspired to chill the free speech of the members of the local union. 118 L.R.R.M. 3160, 3166, 1985 U.S. Dist. LEXIS 22753, at *24 (C.D. Cal. 1985), aff’d in part rev’d in part in unpublished op., 1986 U.S. App. LEXIS 30564 (9th Cir. Feb. 24, 1986). The court found that the International had acted unconscionably and in bad faith in trying to “influence the outcome of the Local elections, to effect policy decision more properly left to the democratic vote of the union membership, and to arbitrarily remove elected union officials.” Id.; see also United Bhd. of Carpenters & Joiners v. Brown, 343 F.2d 872, 882-83 (10th Cir. 1965) (holding that trusteeship was invalid and fell outside the scope permitted by the LMRDA; “the imposition of the trusteeship in question could have no other effect than to stifle democratic processes by, in effect, voiding the results of the properly conducted elections on the issues involved”). Similarly, in United Foods and Commercial Workers International Union v. Retail Store Employees Union Local No. 919, the court invalidated a trusteeship imposed as a result of a

(Footnote continued from previous page.)

(“There’s no dispute that UHW is effective at bargaining contracts”); DeBruin Tr. 1245:13-16 (UHW has “very good contract standards”); Hauptman 9/26 Tr. 107:20 -108:5 (Hauptman knew that UHW had negotiated contracts for years to synchronize renewal in 2008)).

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personal dispute between the international and local presidents. 104 L.R.R.M. 2089, 2095, 1979 U.S. Dist. LEXIS 10842, at *20-24 (D. Conn.), aff’d without op., 614 F.2d 1291 (2d Cir. 1979). Therefore, the Hearing Officer should recommend against a trusteeship if the Hearing Officer finds that the International is attempting to impose a trusteeship in bad faith. C. Congress’s Intent in Passing the LMRDA Included Rooting Out Personal Corruption, Fostering Union Democracy, Enabling Locals to Choose Their Own Leaders, and Preventing International Unions from Using Trusteeships to Consolidate Power

When Congress enacted the LMRDA, it recognized “that in some instances trusteeships have been used as a means of consolidating the power of corrupt union officers, plundering and dissipating the resources of local unions, and preventing the growth of competing political elements within the organization.” Sheet Metal Workers’ Int. Ass’n. v. Lynn, 488 U.S. 347, 35657 n.8 (1989) (emphasis in original) (quoting S. Rep. No. 187, 86th Cong. 1st Sess. 17 (1959)); see also Benda, 584 F.2d at 310. The McClellan Committee’s investigation of union corruption had uncovered common law trusteeships that had been “invalidly imposed as a means of seizing the local’s assets, of installing corrupt leadership, of using locals as pawns in intra union battles, and of depriving members of the right to self-government for long periods of time.” Janice Bellace, Union Trusteeships: Difficulties in Applying Sections 302 and 304(c) of the LandrumGriffin Act, 25 Am. U. L. Rev. 337, 346 (1976) (cited in Int’l Bhd. of Boilermakers v. Local Lodge 714, 845 F.2d 687, 690 (7th Cir. 1988) (citing S. Rep. No. 1417, 85th Cong., 2d Sess. 438 at 371, 420, 438, 447 (1958)); see also Mallick v. Int’l Bhd. of Elec. Workers, 749 F.2d 771, 776 (D.C. Cir. 1984) (LMRDA followed congressional investigations that disclosed that in many instances union officials had run unions as private fiefdoms, in utter defiance of the interests of their members). By enacting the LMRDA, Congress sought to end “autocratic rule by placing the ultimate power in the hands of the members, where it rightfully belongs, so that they may be ruled by their free consent, [and] may bring about a regeneration of union leadership.” Mallick, 749 F.2d at 777 (citation and internal quotations omitted). Congress intended that the LMRDA would “ensure that local affairs are governed by local members under democratic processes, with

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a minimum of outside interference . . . .” Morris v. Hoffa, No. 99-5749, 1999 U.S. Dist. LEXIS 19779, at *20-21 (E.D. Pa. Dec. 28, 1999) (citation and internal quotations omitted). The legislative history also shows that Congress intended the LMRDA to discourage financial misconduct by union officials. As explained by one court: The Senate Report reveals that the purpose of the [LMRDA] is to discourage improper conduct of union officials by making such conduct unprofitable. To accomplish this end, activities and arrangements engaged in by such officials are required to be reported, and are subject to full disclosure. See S. Rep. No. 187, 86th Cong., 1st Sess. 5 (1959), reprinted in 1959 U.S.C.C.A.N. 2318, 2321. Int’l Bhd. of Teamsters v. Local Union No. 810, 19 F.3d 786, 790 (2d Cir. 1994). “The purpose of the Act as a whole is not only to stop and prevent outrageous conduct by thugs and gangsters but also to stop lesser forms of objectionable conduct by those in positions of trust and to protect democratic processes within union organizations.” Carpenters v. Brown, 343 F.2d at 882-83. The “type of misconduct perhaps most frequently envisioned” to be encompassed in “financial malpractice” in the trusteeship setting is personal corruption or diversion of assets against the wishes or without the knowledge of the membership. Graphic Arts Int’l Union AFLCIO v. Graphic Arts Int’l Union, Local No. 529, 529 F. Supp. 587, 593-94 (W.D. Mo. 1982). The Secretary of Labor, in his 1962 report to Congress on the three-year operation of Title III of the LMRDA (which includes section 462’s limitations on trusteeships) interpreted it as such. In cataloging the various purposes for trusteeships, the Secretary categorized financial malpractice as “alleged embezzlement of funds or criminal conduct of officers or members.” Sec’y of Labor, Union Trusteeships: A Report to the Congress upon the Operation of Title III of the LaborManagement Repairing & Disclosure Act, at 55 (1962). “Trusteeships imposed because of actual or suspected criminal conduct, including those established to investigate shortages in a

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subordinate’s funds, were classified under correcting corruption or financial malpractice.” Id., at 66.3 IV. THE INTERNATIONAL HAS FAILED TO PROVE ITS CLAIMS, WHICH WOULD NOT JUSTIFY A TRUSTEESHIP IN ANY EVENT The International has failed to show any “corruption” or “financial malpractice” to justify a trusteeship. The International admits that there was no individual misappropriation of funds — as is typical in trusteeship cases — and that all expenditures by the Education Fund would have been legitimate expenditures from regular UHW accounts. The International has shown none of the types of corruption or financial malpractice that have justified trusteeships in other cases. The International’s entire case rests on its thin claims that UHW made plans to use the Education Fund to resist a trusteeship in the event of a hypothetical future imposition of a trusteeship. As demonstrated at the hearing, those claims are false. Moreover, even if proven, those claims would provide no basis for imposing a trusteeship. A. Charges 1 and 2: The Education Fund Was Established and Used for Proper Purposes and Provides No Basis for Imposition of a Trusteeship 1. The Education Fund Was Created for Openly Disclosed, Legitimate Purposes

In May of 2007, the UHW Executive Board approved the creation of a 501(c)(3) organization, the Education Fund, for the broad purpose of “provid[ing] education to healthcare workers and patients concerning issues related to the healthcare crises, as well as other issues of

Of the 57 trusteeships imposed for the purpose of correcting corruption or financial malpractice during that period, 17 involved union funds or property that had been stolen. Sec’y of Labor, Union Trusteeships: A Report to the Congress upon the Operation of Title III of the Labor-Management Repairing & Disclosure Act, at 55 (1962), at 57. Other circumstances included officers convicted of extortion (e.g., Longshoremen); officers indicted and convicted for “misappropriation and misuse of funds and property of the local” (e.g., Operating Engineers, for acts exposed by the McClellan Committee); officers suspected of fleeing with union funds (e.g., Brick & Clay Workers); unaccounted-for shortages in the local’s funds (e.g., The Firemen & Oilers, and the Teamsters); and excessive payments to local officers that were not supported by receipts or regular compensation for union work (e.g., Building Service Employees). Id., at 5758.

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importance to healthcare workers and their patients,” and authorized UHW contributions of up to $6 million to that fund. (UHW Ex. 14, at 3 (emphasis added).) The Education Fund was created in recognition of the importance of education for healthcare workers and patients and as a vehicle for long-term cooperation with allies who shared that goal. (Rosselli Tr. 948:8-949:21 (“to educate healthcare workers and consumers . . . of . . . the problems — in the industry to accomplish real reform”); Martin Tr. 654:10-655:8; Martinez Tr. 333:2-12 (“we wanted to work with community groups and other labor unions to really push . . . healthcare reform in California”); York-Jones Tr. 313:8-14 (“to provide education to the healthcare workers and to the rank-and-file members of the healthcare crisis”); York-Jones Decl. at ¶ 4; Brennan Tr. 299:10-24 (“we needed to get on board with [the healthcare reform bill] and try to do something to get the community around it”); Borsos 9/27 Tr. 76:2577:4 (“to educate healthcare workers, patients, and the broader community, about issues that were important to healthcare workers, including union democracy”); Lewis Tr. 729:2-730:14.) Its creation also anticipated a combination of events in 2008 that would make member and public education about healthcare issues particularly timely and important. First, the UHW had pursued a strategy of synchronizing its contract expirations, and approximately 100 contracts covering approximately 75,000 workers were set to expire and be the subject of bargaining in 2008. (Borsos 9/27 Tr. 73:12-76:24.) Second, UHW and other concerned organizations had targeted 2008 for a concerted effort to enact comprehensive healthcare reform legislation in California. (Lewis Tr. 729:2-730:14; Borsos 9/27 Tr. 74:2-75:23.) Third, 2008 was a presidential election year, and it was expected that healthcare reform would receive significant attention as part of the presidential campaign. (Kumar Tr. 816:18-843:9; Borsos 9/27 Tr. 76:12-24; Rosselli Tr. 937:412; Lewis Tr. 729:2-730:14.) In creating the Education Fund, UHW conceived of healthcare education broadly to include the importance of union democracy for the delivery of optimal healthcare to patients. Far from hiding this purpose or creating “false official records” about the purposes of the Education Fund, as alleged by the International (Amended Notice of Hearing on Whether a

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Trustee Should Be Appointed (“Am. Notice”), at 2-6), the Fund’s application to the IRS for tax exemption as a 501(c)(3) organization made explicit the Fund’s intent to emphasize the importance of union democracy and its relation to healthcare reform. A “Narrative Description of Activities” attached to that application stated: This non-profit educational organization expects that it will emphasize in its educational material the importance of full and open and democratic labor organizations in addressing and solving the current health care crisis. This organization expects to emphasize the full inclusion and involvement of health care workers in addressing the crisis, to be achieved by full democratic participation of these healthcare workers in making decisions concerning every aspect of how and when healthcare is provided to patients, and under what conditions. (UHW Ex. 28, Form 23, Part IV, Narrative Description of Activities; Int’l Ex. (“Int’l Ex. 7”), at 54 (emphasis added); see also Harmon Tr. 420:17-421:7 (the Education Fund’s IRS Form 1023 adequately discloses purpose to provide education with regard to union democracy and relation between union democracy and healthcare reform).) As explained by expert witness Gail Harmon and conceded by International expert Michael Trister, education regarding the importance of union democracy and the relation between union democracy and healthcare reform is a proper educational and/or charitable purpose for a 501(c)(3) organization. (Harmon Tr. 419:1-21; Trister Tr. 648:6-649:3.) When the Education Fund was created in May 2007, UHW Executive Board members were also concerned about undemocratic practices within SEIU, and this concern was also discussed at the May 18-19, 2007 UHW Executive Board meeting. This was no secret to the International. Indeed, Sal Rosselli expressed those concerns in a June 1, 2007 letter to Andy Stern: A number of recent developments make it necessary that I voice formally to you various concerns that are fundamental to SEIUUHW’s purpose, vision and values. These concerns relate to our inability to debate issues safely within SEIU, SEIU’s decisionmaking process and the voice our members have in SEIU and Employer Alliance Agreements. We have tried repeatedly to raise these concerns within SEIU, and at every turn we have found the leadership of our international union to be indifferent and, at times,

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even hostile. We again are seeking to raise these concerns in the spirit of working constructively to build the union we “all have” worked so hard to create over many years. It is precisely because we care so deeply about the future of SEIU – our union – that we must raise these issues and must ensure that they are not rejected out of hand or characterized as disloyal or misguided. (UHW Ex. 16, at 1.) Mr. Rosselli also noted in his letter to Mr. Stern the need for member education about these issues: Due to our concern about these profoundly important issues, SEIUUHW’s Executive Board unanimously adopted the enclosed Resolution on May 19, 2007. At the same meeting, the SEIUUHW Executive Board unanimously voted to implement an internal education program to inform our members about the significant differences between our local union and some officers in SEIU. Our member leaders are currently collecting signatures on a petition to the SEIU Executive Board (enclosed). Id., at 5. But while the UHW Executive Board perceived a relationship between the need for education about union democracy and the creation of the Education Fund, the Education Fund was not created for the primary purpose of member education about undemocratic practices within SEIU. (Rosselli Tr. 951:19-952:11.) The educational purposes and anticipated activities of the Education Fund, while appropriate for a 501(c)(3) organization, were also directly related to effective representation of healthcare workers and could have been funded by the union directly. (See Hauptman 9/26 Tr. 116:6-13.) The Education Fund was created, however, to set aside funds specifically for these purposes and activities and so that tax-deductible donations could be made to the fund by union members, non-union members, and organizations who shared UHW’s educational goals. (Rosselli Tr. 950:1-18; Martin Tr. 654:25-655:8; Borsos 9/27 Tr. 76:25-77:22; Lewis Tr. 729:2730:14.) The creation by unions of subsidiary and affiliated organizations is commonplace. Indeed, during the period of 2005-2007, the International provided nearly $22 million of funding

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to 12 such organizations (9 of which were tax-exempt 501(c) organizations). (UHW Ex. 206, at 2-3, Attachment 1.)4 The International alleges that UHW created the Education Fund in May of 2007, not for its stated purposes, but for the secret, “true purpose . . . of financ[ing] a defense of top officers in the event of a trusteeship by the International Union and to convert union dues into a private source of outside funds to maintain their power.” (Am. Notice, at 5.) The International has presented, however, (1) no evidence to explain why UHW could or would have anticipated in May of 2007 the need to defend against a trusteeship action, (2) no credible evidence that this

The International’s attempts to portray the Education Fund as an unusual organization are false and misleading. As demonstrated by the testimony and report of Fred Seavey (UHW Ex. 206), there was nothing unusual about the Education Fund’s creation or operation, when compared to the International’s practices — except that it was aborted before it took off, at the behest of the International. His report shows: x x Unions, including the International, regularly establish 501(c) organizations; the International alone has 12 subsidiary or affiliate 501(c) organizations; Unions provide substantial funding to their subsidiaries and affiliates; for example, between 2005 and 2007, the International donated $8.9 million in cash to Five Stones and $1.3 million to Qvisory (Seavey Tr. 868:7-869:24); The International has established at least two subsidiaries whose boards of directors are composed entirely of the International’s officers and staff; The International has established subsidiary 501(c) organizations with educational purposes; At least one International subsidiary 501(c)(3) spent funds in ways not on their face consistent with the organization’s stated purpose; At least one International subsidiary 501(c)(3) has spent a substantial portion of its annual budget (20%) on public advocacy activities; The International spent 16.4% of its net assets in 2007 on funding subsidiary and affiliate 501(c) organizations; and The International has created no publicity around some of its affiliate or subsidiary 501(c) organizations — including the mysterious “SEIU Services Corp.” and “SEIU Education and Support Fund.”

4

x x x x x x

(UHW Ex. 206.)

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use of the Education Fund was ever contemplated, and (3) no evidence that any UHW funds contributed to the Education Fund, or any UHW funds, were ever used for an improper purpose. In support of its allegation of a secret purpose for the Education Fund, the International relies primarily on the testimony of Amado David. Mr. David testified that, at the May 18-19, 2007 Executive Board meeting, “Sal Rosselli spoke and approached that millions of dollars be moved into a fund and that fund was going to be used in the event or in case a trusteeship was imposed by the International Union.” (David 9/26 Tr. 140:9-14.) Of the approximately 80 UHW Executive Board members present at the May 18-19, 2007 meeting, only Mr. David testified that there was any discussion about using the Education Fund in the event that a trusteeship was imposed by the International. Seven Executive Board members, including rank-and-file UHW members Will Brennan and Helen York-Jones, who volunteer their time to serve on the Executive Board, testified categorically that there was no such discussion at the May 2007 meeting or at any other time. (Brennan Tr. 300:15-302:24; York-Jones Tr. 314:1-24; Borsos 9/27 Tr. 79:8-80:2; Martinez Tr. 333:13-334:7, 348:25-349:4; Martin Tr. 655:9-16; Lewis Tr. 730:15-25; Rosselli Tr. 952:12-953:5.)5 For multiple reasons, Mr. David’s testimony regarding the Education Fund is neither credible nor reliable, and his testimony cannot be the basis to impose a trusteeship on UHW: First, Mr. David voted in favor of the Education Fund in May 2007 and never raised any concerns regarding its legitimacy, at or after the meeting. (David 9/26 Tr. 148:10-11, 150:8-11; Lewis Tr. 731:4-732:1.) Nor, when he saw the minutes of the May 18-19, 2007 Executive Board meeting, did Mr. David go to anyone — not to Sal Rosselli, not to Andy Stern, not to anyone, publicly or privately — and say that the board meeting minutes were incorrect. (David 9/26 Tr. 148:24-149:10; 150:8-11.) Indeed, Mr. David came forward with this account of the May 2007 Executive Board meeting for the first time at the September 26, 2008 trusteeship hearing — five In response to questioning by counsel for the International, Ms. York-Jones searched for and produced notes that she took about the Education Fund at the May 2007 meeting. (YorkJones Tr. 316:16-17, 317:12-16; see York-Jones Decl.)
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months after the International had made its allegation about the “secret purpose” of the Education Fund in a federal lawsuit and in an extensive mailing campaign to union members. Second, Mr. David resigned from UHW on February 1, 2008, and submitted a resignation letter. (UHW Ex. 210.) His resignation letter, however, makes no mention of the Education Fund. The Education Fund was simply not an issue for Mr. David in 2007 or in early 2008. (Fernandez Tr. 1152:2-23, 1153:19-1154:13.) It is an issue now only because, as explained below, it has become a pretext for Mr. David to wage his political battle against UHW and to “stop” Sal Rosselli. Third, Mr. David is motivated by a desire to retaliate against UHW and its leaders because he opposes the direction for the labor movement advocated by UHW and its decision to speak out publicly against the direction in which International leadership is taking SEIU. Far from a neutral observer, Mr. David has a large stake in the International’s political fight with UHW. Mr. David publicly resigned6 from UHW over a political dispute with UHW’s leaders regarding the direction of the labor movement — the same political dispute between UHW and the International that is at the heart of this hearing. Mr. David sides with the International. In fact, before Mr. David resigned from UHW, he already had a job with the International. (Lewis Tr. 732:10-733:4.) And when he testified, he was an employee of the International. (David 9/26 Tr. 129:15-16.) Mr. David stated in his resignation letter that “it pains me to watch the current direction of UHW.” He wrote, “Leaving UHW at this point in time is not what I wanted but it is the only way to contribute to our new National Healthcare Workers Union at the time when it is in greatest need of all of our leadership.” (UHW Ex. 210.) Mr. David testified that he strongly opposed the decision of UHW’s Executive Board, made in January of 2008, to publicly oppose the direction in which International leaders were He sent his resignation letter, addressed to Sal Rosselli, to UHW Executive Board members and UHW staff and apparently others, though not to Mr. Rosselli. (Rosselli Tr. 955:923; Fernandez Tr. 1153:13-21.)
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taking SEIU and to speak out about undemocratic practices within SEIU. (David 9/26 Tr. 143:114.) At the hearing, Mr. David was clearly angry about this during his testimony. He admitted, “If I’m expressing anger [about] what’s happening at the labor movement today, I am angry about that.” (Id., 161:2-6.) Indeed, Mr. David professed his intent to stop UHW’s leaders from pursuing their political agenda. He testified: Q: A: Q: A: Did you disagree with Sal Rosselli’s decision to make public his view of where the movement should go? Yes, I did. You wanted to quash Sal — That’s the reason why I quit.

(David 9/26 Tr. 159:25-160:4.) His motivation to “quash” UHW was shown by other evidence as well. Barbara Lewis testified that Mr. David told her in February 2008 that “Sal had to be stopped; that the direction he was taking the union was dangerous.” (Lewis Tr. 735:7-13.) He begged Ms. Lewis to quit; he told her that, if she quit, it would send a strong message to UHW that the union is going in the wrong direction; he told Ms. Lewis that, if she left UHW, “Southern California would be destroyed,” meaning that UHW in Southern California would be destroyed. (Lewis Tr. 734:22-736:14.) Fourth, Mr. David attempted to injure UHW by organizing UHW’s members against UHW. (See Lewis Tr. 738:22-741:20.) For example, on or about March 24, 2008, Mr. David, out of the blue, sent a rank-and-file UHW shop steward — Ray Cano — a copy of Andy Stern’s March 24, 2008 letter setting forth allegations against UHW, met with Mr. Cano, and attempted to agitate him against UHW. (Cano Tr. 400:6-10, 414:13-15 (Mr. Cano never asked Mr. David for Stern’s March 24 letter); UHW Ex. 209.) As early as March 24, 2008 — the same day of Andy Stern’s letter — Mr. David was spreading anti-UHW information among UHW’s members.

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Fifth, Mr. David was part of the International’s team that was organized to attack UHW. Mr. DeBruin admitted that Mr. David was part of his own project to wage a campaign against UHW. (DeBruin Tr. 1336:10-19.) Sixth, as part of the campaign against UHW, Mr. David has been actively engaged in attempting to recruit other witnesses, including Pamela Burton and Terri Fernandez, to testify against UHW. (Burton Tr. 1127:22-1130:9; Fernandez Tr. 1152:12-1156:17.) Seventh, as further revealed at the hearing, Mr. David has lied on other occasions. For example, he lied to Barbara Lewis and Sal Rosselli about his intentions when he left UHW, and to Will Brennan the night before he testified on September 26, 2008. (Lewis Tr. 738:4-741:20; Brennan Tr. 302:19-24, 304:23-305:21.) Eighth, on a personal level, Mr. David has long been disgruntled towards Sal Rosselli. Mr. David admitted that he opposed Mr. Rosselli’s candidacy for president of Local 250 in 1988. (David Tr. 132:8-25.) In 2005 when a vote was held to approve the merger of Local 399 and Local 250, Mr. David opposed the merger. (Id., 134:7-23.) And, Mr. Rosselli terminated Mr. David’s employment at Local 250 in 1988 because of Mr. David’s incompetence. (Id., 146:20-147:7; Rosselli Tr. 911:15-25.) Besides Mr. David and the seven other Executive Board members whose testimony is noted above, the only other person who was present at the May 18-19, 2007 meeting, and who testified about the meeting, was Pamela Burton. Ms. Burton, who was recruited by Mr. David to testify (Burton Tr. 1128:6-1129:24; 1154:17-1155:8), had been used in the past to promote the International’s campaign against UHW. She was featured on a flyer sent out by the International prior to the June 2008 SEIU convention as a former UHW Executive Board member who supported the International’s “Justice for All” convention platform. (UHW Ex. 226: see Burton Tr. 1122:24-1123:19, 1136:17-1138:14.) And on May 20, 2008, in the weeks prior to the convention, someone sent an email that purported to be from Pamela Burton to other UHW members and alleged that “there [had been] money put aside [by UHW] in the millions for a war chest to fight SEIU.” (UHW Ex. 225.) This repeated an allegation made by the International in

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a federal lawsuit filed on April 29, 2008, and in flyers sent to UHW members shortly thereafter. (Int’l Ex. 108, at ¶ 34; UHW Ex. 189 (“Top UHW-W officers transferred millions of your dues money to an outside fund in violation of federal law”).) Ms. Burton testified at the trusteeship hearing, however, that the email was not from her and was sent from an email address (pburton70@gmail.com) that did not belong to her. (Burton Tr. 1126:14-20.) In these and other regards, Ms. Burton’s testimony shows confusion and a lack of reliability. Ms. Burton testified that Sal Rosselli “called out” the names of individuals who would serve on the Education Fund board, whereas everyone else who testified about selection of the Education Fund board members recalled that Mr. Rosselli called for volunteers, and that all who volunteered became members of the Education Fund board. (Burton Tr. 1119:16-25; but see Martin Tr. 655:17-22; York-Jones Tr. 314:25-315:13.) Ms. Burton did not recall discussion of trusteeship but testified that Mr. Rosselli “talked about the disagreement he was having with SEIU, and there was some discussion about that. Then he wanted to take some money, about $6 million, out of the Union and put it the educational fund.” (Burton Tr. 1119:4-9.) Ms. Burton may well have conflated discussion at the meeting about undemocratic practices within SEIU and the need to educate UHW members about those practices (see UHW Ex. 16, at 4) with discussion of the Education Fund. The International additionally presented the testimony of Terri Fernandez, who was also recruited to testify by Mr. David. (Fernandez Tr. 1154:24-1155:5.) Ms. Fernandez, who was not at the May 2007 Executive Board meeting, testified that Pamela Burton had told her “that there had been a discussion about moving a lot of money . . . in the millions — to an account that they were going to call an educational fund, but it was really — her term was a war chest to fight SEIU.” (Id., 1151:21-23, 1146:4-14 (emphasis added).) Ms. Fernandez also testified that another UHW Executive Board member, Teresita Collado, talked to her about the May 2007 meeting. Ms. Fernandez testified that Ms. Collado told her “that there was an attorney there who gave them a kind of pep talk about being united and being on the same page, and that they were going to take a good amount of money . . . it was in the millions — and that it could be an

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educational fund, but that she felt it would be used for possible impending trusteeship.” (Id., 1148:3-11 (emphasis added).) However, Ms. Collado herself made a statement at the September 27, 2008 hearing, which does not support Ms. Fernandez’s testimony. Ms. Collado asked “[h]ow dare you . . . question the integrity of those people in that Executive Board . . . Our leaders are elected. If we sat at a meeting, we’re representing our members. We are responsible to tell our members. We don’t hide anything about anything that we do.” (Collado 9/27 Tr. 212:22-213:10.) After Ms. Fernandez testified, Ms. Collado wrote to the Hearing Officer directly and stated: What Terry Fernandez said in her testimony to you was not true. I have not known her for 30 years. I have only worked at Kaiser for 13 years. I have never spoken to her about our Education Fund. Even the words she used to describe the conversation (that never took place) are not the words I would use like “war chest.” (See Letter Compilations, Exhibit No. 246 (Nov. 26, 2008 e-mail from Teresita R. Collado to Hearing Officer).) Ms. Collado also explained that Amado David contacted her, asked her about the Executive Board meeting regarding the Education Fund, and pressured her to make false statements. (Collado 9/27 Tr. 212:22-213:10.) She also pointed out that Pam Burton and Ms. Fernandez are not credible witnesses and are disgruntled with UHW. According to Ms. Collado, “Pam Burton did not attend our Executive Board Meetings very often and when she did, she would leave early and go to her hotel room or she would just fall asleep during the meeting. I don’t know how she could remember anything.” (Id.) The International relies finally on a statement made by Herman Benson, the founder of the Association for Union Democracy, in his “Union Democracy Blog” on April 2, 2008. (See Int’l Ex. 26, at 930-934.) Benson’s five-page blog, entitled “Stern’s threat to trustee west coast SEIU local poses danger to democracy in labor movement,” expressed his view on publiclyavailable information regarding allegations that Stern had made against UHW, and the selfevident threat of trusteeship that those allegations conveyed. Stern’s allegations, set forth in his

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March 24, 2008 letter to Sal Rosselli, included a claim that the Education Fund amounted to “creation of a shadow entity and transfer of local union treasury money to circumvent internal union governance obligations” and that it was designed “to thwart U.S. Department of Labor oversight and federal labor law restrictions on the nature, appropriateness and extent of certain future expenditures.” (UHW Ex. 59, at 1-2.) Mr. Benson speculated about the use of the fund described by Stern and discussed applicable federal law: [E]ven under a trusteeship, members retain certain democratic rights protected by the LMRDA; but in the main, these rights can be enforced only by private suit. Without money these rights become a fiction because the trustee’s victims can’t afford the costs of a federal lawsuit. The independent fund established by UHW-W, free from Stern’s control, would give members resources to resist the imposition of the trusteeship and, if it is imposed, would help defend their rights while it remains in effect. Consistent with his drive to eliminate opposition, Stern would deprive his critics of their right to self-defense. The first of the charges against Rosselli [in Stern’s 3/24/08 letter] attacks the local’s right to establish this fund in defense of democratic rights. (Int’l Ex. 26, at 933.) Mr. Benson, however, is a not a UHW member and has no authority to speak for UHW. There is no evidence that he discussed what he said in his blog with anyone at UHW, either before or after posting it. UHW did not endorse his blog. (Borsos 11/12 Tr. 203:17-18.) The International misleadingly combines Mr. Benson’s five-page April 2, 2008 blog in a single exhibit (Int’l Ex. 26) with a screen shot from the UHW’s “SEIUVOICE.ORG” website, which quoted three paragraphs from the first page of Mr. Benson’s blog and provided a reference to the blog. (Borsos 11/12 Tr. 202:19-203:16.) The paragraphs that were quoted on the website say nothing about the Education Fund or its purpose but discuss only the historical uniqueness of the threatened trusteeship: “What would make a current trusteeship move by Stern different from all the rest is this: for the first time since the adoption of the LMRDA in 1959, a massive trusteeship has been threatened against so major a section of a union for politically repressive objectives.” (Int’l Ex. 26, at 929.) UHW posted only that statement, which UHW believes to be true. (Borsos 11/12 Tr. 203:17-204:17.)

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UHW did not post the portion of Mr. Benson’s blog that the International relies upon on UHW’s website. (Id., 202:14-17.) UHW did provide a link to the blog, but only to provide the source for the quotation that UHW posted, in the event the reader wanted to verify the statement — a technique akin to placing a citation to a source in a footnote or a bibliography in an academic paper. (Id., 203:6-24.) UHW’s providing a link to the blog was no more an endorsement than citing a source in a bibliography. (Id., 203:6-204:3.) In fact, UHW sometimes posts articles or items on its website that it disagrees with, such as some of Andy Stern’s letters. (Id., 204:7-205:2.) Mr. Benson’s speculation in his blog about the Education Fund and the legal limits of its use shows nothing about the purposes for which the UHW created the Education Fund in May of 2007 and nothing about the actual use to which the Fund was put. There is simply no credible evidence that the Education Fund was created for anything other than its legitimate, stated purpose: to provide education to healthcare workers and patients about healthcare reform and “other issues of importance to healthcare workers and their patients” (UHW Ex. 14, at 3), including the importance of union and workplace democracy. 2. All Funding of and Expenditures from the Education Fund Were Proper to the Purposes of the Fund and Made Under the Control of UHW’s Executive Board

The International alleges that UHW’s creation and use of the Education Fund was “financial malpractice” within the meaning of the LMRDA and the SEIU constitution. (Amended Notice, at 1-2.) In stark contrast to the self-dealing in other SEIU locals by leaders appointed by President Stern (see UHW Exs. 129, 130, 134, 137, 138, 142, 144, 145, 150, 158, and 196), however, the International makes no allegation that the officers of UHW have personally profited in any way from expenditures made from the Education Fund or from any use of union funds. (See Hauptman 9/26 Tr. 98:1-2 (counsel for the International: “There is no allegation in this proceeding that money was spent for personal purposes.”).) Indeed, despite reviewing thousands of pages of UHW financial records, International monitor Bob Hauptman found no evidence that union funds were spent for anything other than union business. (Id.,

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98:10-98:18.) The International’s claim of financial malpractice rests solely on UHW’s transfer of funds to the Education Fund, as authorized by the UHW Executive Board, and the Education Fund’s use of those funds. The evidence at the trusteeship hearing showed, however, that all expenditures from the Education Fund were justified both for the purposes of the Fund and in the interest of UHW members. Moreover, the Education Fund has been effectively dissolved for nearly eight months at the International’s request, and all unused funds have been returned to UHW. (UHW Ex. 96; Int’l Ex. 45; Rosselli Tr. 965:20-966:5; Martin Tr. 722:11-14, 724:2-23; Kupperberg Tr. 513:3-9; Hauptman 9/26 Tr. 87:9-13, 102:11-14.) When the Education Fund was created in May of 2007, the UHW Executive Board approved “up to $6 million” for its operation. (UHW Ex. 14, at 3.) Shortly thereafter, $1 million was transferred to the Education Fund. (Rosselli Tr. 958:10-12; Int’l Ex. 23, at 144.) In its IRS Form 1023 application filed in November of 2007, UHW projected $1 million in contributions to the Education Fund in each of the first four years of its operation, 2007-2010, for a total of $4 million. A second contribution of $2 million was made to the fund in February of 2008, for a total of $3 million. (Int’l Ex. 9; Rosselli Tr. 957:13-25.) The International contends that the amount of these contributions is unusual and suggestive of a hidden, nefarious purpose — that the $3 million contributed over a two-year period was extraordinary because it represented a high percentage of UHW’s net assets of approximately $15 million. (Hauptman 9/26 Tr. 83:24-84:8.) But in 2007 alone, the International provided a total of $10.5 million in funding to its subsidiaries and affiliates, which was equivalent to 16.4% of its net assets of $64.2 million, according to its IRS Form LM-2. (UHW Ex. 206, at 7; Seavey Tr. 879:11-18.) Moreover, as explained by accounting expert Cliff Kupperberg, a comparison of an expenditure or fund transfer to net assets is less meaningful than a comparison to income or total expenditures. (Kupperberg Tr. 517:18-518:3.) As Mr. Kupperberg noted, the yearly transfers here represented a very small percentage of UHW’s yearly income of over $80 million; and during 2007, the last year for which audited statements have been prepared, UHW’s net assets actually increased by $5 million despite the contribution

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to the Education Fund. (Id., 518:4-519:4 (UHW’s $1 million contribution represented 1.5% of its 2007 revenues); Borsos 9/27 Tr. 65:4-6.) The International also questions the timing of the $2 million transfer to the Education Fund in February of 2008. But at that time, UHW still anticipated that 2008 would be a particularly important year for healthcare education because of its coordinated bargaining for more than 75,000 members, the continuing effort for healthcare reform legislation in California, and the presidential election campaign. (Rosselli Tr. 959:1-960:22; Borsos 9/27 Tr. 73:12-74:13; 83:19-84:9; Borsos 11/12/08 Tr. 192:12-193:8; UHW Ex. 207 (excerpts from UHW’s Unity Magazine).) Indeed, UHW’s kickoff for the 2008 bargaining campaign took place on February 20, 2008. (See UHW Ex. 43; Borsos 9/27 Tr. 83:19-84:12; Rosselli Tr. 960:8-961:20, 965:1218.) This coordinated bargaining campaign was considered an optimum time for educational efforts about healthcare reform and particularly the relationship between workplace democracy and patient care. (Borsos 9/27 Tr. 74:14-75:23; see UHW Ex. 43; see UHW Ex. 67; Hauptman 9/26 Tr. 108:11-17 (SEIU monitor Bob Hauptman admitted that “education to members and the public about issues related to health care” is sometimes done in connection with bargaining campaigns).) The International argues that the contribution of $2 million on February 5, 2008, was inconsistent with the purpose of doing healthcare reform education in the context of efforts to bring about comprehensive healthcare reform legislation in California, because “the California healthcare ballot initiative . . . died on January 28, 2008 because it depended on a financing mechanism rejected by the California Senate Health Committee.” (Amended Notice, at 3.) In fact, however, Governor Schwarzenegger and Senate leaders held a news conference the following day to announce that they would continue to push for the proposed legislation. (See UHW Ex. 40.) Governor Schwarzenegger told the news conference: “Basically, as I have said, this is a bump in the road. This is not over for health care reform. We’re going to regroup again, bring everyone together, bring the Senate, the Assembly, all the stakeholders together to get this

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done.” (Id. at 1.) At the same news conference, Dean Tipps, representing the State Council SEIU, vowed to continue the effort for healthcare reform: Our union made health care reform its No. 1 priority this year, and actually the year before, and said this is our goal we will not stop until we achieve comprehensive health care reform. That is our position now . . . . This system we have today is more than broken; it is completely unacceptable, and it needs change. And there is urgency behind that. And from our standpoint, we will not quit until we achieve comprehensive health care reform in this state and nationally, and we very much thank the Governor for his commitment to keep the fight going forward . . . (Id. at 3-4). The testimony of the International’s own expert, Mr. Zelman, showed that the need for public discussion and education persisted even after ABX1-1 failed to pass the Senate. Mr. Zelman admitted that, after January 28, there was thought given in the Legislature to what elements of ABX1-1 could be salvaged and approved. (Zelman Tr. 27:20-28:13.) He agreed that, after January 28, 2008, it was possible to draft, obtain approval of, and qualify a healthcare initiative for the November ballot. “Theoretically, it could be done.” (Id., 31:25-32:4.) He also admitted that, after January 28, 2008, people were discussing how to put proposals to expand children’s healthcare coverage on the November 2008 ballot. (Id., 27:20-28:4, 32:9-15.) In fact, this initiative had gone past the discussion stage: a filing of title and summary for a children’s healthcare expansion ballot measure was actually made with the California Attorney General’s office on February 6, 2008. (UHW Ex. 202.) While universal healthcare for children is a lesser measure than a universal healthcare proposal for California, this initiative would also have required enormous resources. (Kumar Tr. 839:11-840:2.) Moreover, Mr. Zelman admitted that public discussion about healthcare is important, that it important today, and that such discussion was important after January 28, 2008. He agreed that “[i]t’s always valuable.” (Zelman Tr. 36:15-23.) He admitted that after January 28, 2008, Governor Schwarzenegger, Speaker Nunez, and SEIU’s own representative, Dean Tipps, made statements that they would keep fighting for healthcare reform. (Zelman Tr. 38-40, 44-45:24.)

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And, their statements meant that California was going to need public discussion and public education about healthcare reform. (Id., 39:19-22.) He stated: “There are always discussions about healthcare reform. It’s, you know, the biggest piece of the California economy, along with education. There are always people thinking about it on all sides.” (Id., 51:22-52:4.) Mr. Kumar provided examples of the various healthcare legislative initiatives and activities that continued after January 28, 2008.7 These included increased activity in the days surrounding February 5, such as numerous meetings about the possibility of a new initiative for 2008. (Kumar, 836:19-837:7.) UHW met with key coalition partners, including Catholic Healthcare West, Kaiser Permanente, the SEIU State Council’s lead staff people, and other institutional players, as well as the Speaker’s office and the Governor’s office. (Id.) These calls and meetings continued until February 8, 2008. Mr. Kumar indicated that the lack of political support for healthcare reform would only increase the union’s need to educate the public to get additional support. (Id., 837:19-838:2.) In addition, six other new healthcare bills were introduced in the California legislature in February 2008, and five existing healthcare bills were considered. (UHW Exs. 202, 213; Kumar Tr. 838:12-842:24.) Each of these bills was a component of ABX1-1. (Kumar Tr. 842:21-24.) Of these, UHW was the primary drafter of Assembly Bill 2976 on cost and quality transparency – a healthcare initiative introduced to the Assembly on February 22, 2008, and a critical part of ABX1-1. (Id., 840:7-8, 841:21-842:13; UHW Ex. 213.) Mr. Kumar also gave examples of the numerous other healthcare initiatives that had failed, but then been resurrected in 2007 alone: Governor Schwarzenegger’s failed January 2007 proposal; Nuñez’s AB 8 — vetoed in September 2007; the Governor’s October 9, 2007 proposal; and finally, ABX1-1. (Id., 821:25-832:5.) Mr. Kumar was UHW’s point person on healthcare reform. (Id., 845:12-14.) He testified that Mr. Zelman had never contacted him or his staff members to determine what UHW was doing in healthcare reform. (Id., 845:12-19.) Mr. Zelman had also never attended any of the conference calls and meetings that UHW and the State Council had had with employers, the government, and other working groups. (Id., 844:22-845:6.) He had not prepared any work product that was considered in UHW’s development of its approach to healthcare reform. (Id., 845:7-11.)
7

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Because the International raised questions about the Education Fund in March of 2008, most anticipated programs were never actually undertaken. UHW Exhibit 85 is an agenda from a program presented by UHW on April 16, 2008, a community forum to discuss a white paper regarding the healthcare crisis. (Borsos 9/27 Tr. 82:17-83:4; UHW Ex. 85.) UHW envisioned using the Education Fund for these types of events. (Borsos 9/27 Tr. 83:5-18.) UHW refrained from using Education Fund monies for these events because the International created a dispute regarding the Fund. (Id., 83:5-18, 85:23-86:8; Rosselli Tr. 962:19-963:11.) The IRS approval of the Education Fund’s application for tax exempt status (UHW Ex. 183) issued on March 24, 2008, the same day that President Stern sent his letter making allegations about the Education Fund. (UHW Ex. 59.) On April 10, 2008, in response to President Stern’s request in an April 7, 2008 letter (UHW Ex. 184), the Education Fund agreed to “refrain from any further expenditures of funds donated to it by the UHW-W, with the exception of funds necessary to maintain the already established administrative apparatus of the funds.” (UHW Ex. 80.) While in operation, the Education Fund issued 19 checks for a total $174,775.42. (See UHW Ex. 98-C.) Because of the return of a retainer payment of $52,500 from one consultant and a $450 rebate on fax machines, the total expenditures by the Education Fund were $121,825.42. (UHW Ex. 167; see Martin Tr. 720:17-25.) Those expenditures were typical for a start-up operation and appropriate to the stated purposes of the Education Fund. They included legal fees in setting up the fund (Weinberg), payments to an IT consultant (Fernandez), purchases of office equipment (Office Depot, Dell, Target, and Office Max), and telephone service (AT&T). (See Martin Tr. 663:14-664:5, 665:225, 669:8-11.) The Fund also purchased 100 cell phones to allow for mobile phone banking. (See id., 666:1-11.) Storage space was rented to accommodate anticipated donations of furniture. (Id., 668:19-669:7). Approximately half of the remaining expenditures by the Education Fund were made to two consultants: Edward Garvey ($28,259.80) and Arthur Fox ($22,500.00). (UHW Ex. 167.) Both had to do directly with the stated educational purposes of the Fund.

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Mr. Garvey is a media consultant who was retained to help communicate a national healthcare reform message and “to publicize the work [UHW was] doing on behalf of members, patients, and the community with respect to healthcare.” (Martin Tr. 659:1-18; Int’l Ex. 4.) He consulted with UHW with regard to “potential ideas for a website and a video to broadcast the issues of healthcare reform more broadly across the country.” (Martin Tr. 659:24-660:12.) He arranged for a speech by Sal Rosselli regarding healthcare reform at an annual progressive event in Wisconsin called the “Fighting Bob Fest,” at which “thousands of people come and talk about issues of importance to Americans.” (Id., 659:9-660:2; see UHW Ex. 21.) Mr. Fox, an attorney and a nationally known expert on union democracy issues, was retained to give legal and consulting advice to the Education Fund. (Martin Tr. 664:15-20.) The Amended Notice complains about the payment to Mr. Fox, whom it characterizes as “a wellknown LMRDA practitioner with no expertise in the healthcare crisis.” (Amended Notice, at 4.) The description of Education Fund activities filed with the IRS in November of 2007 specifically noted, however, that “[t]his non-profit educational organization expects that it will emphasize in its educational material the importance of full and open and democratic labor organizations in addressing and solving the current health care crisis.” (UHW Ex. 28, Form 1023, Part IV, Narrative Description of Activities; see Hauptman 9/26 Tr. 112:21-113:1 (International monitor stating that it would be appropriate for an organization to retain a consultant with expertise in the organization’s stated purpose of union democracy).) The remaining Education Fund expenditure of $50,804 was for a mailing to UHW members communicating the results of an independently conducted election that gave long-term care workers the opportunity to vote on whether they would choose to remain in UHW, an integrated healthcare workers union, or be merged into a single long-term care union. (Martin Tr. 668:5-9; Int’l Ex. 9.) The Education Fund Board had authorized up to $225,000 for conduct of this election, but determined that only the publication of information about the results of the election would be educational and, therefore, an appropriate expenditure for the Education Fund. (Martin Tr. 667:11-668:18.)

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The International’s claim that Education Fund expenditures were unrelated to its stated purpose is thus false. All of the expenditures were appropriate for an educational organization and related to education about healthcare as broadly conceived when the Education Fund was created and as reflected in official documents filed in connection with establishing the Fund, including the IRS application for tax-exempt status. The International argued in its opening statement that what was wrong with the operation of the Education Fund is that its expenditures were “outside of the view of the local union’s members and outside of the constitutional and legal controls that ensure accountability to members for how their money is being spent.” (Int’l 9/26 Opening Stmt. 26:9-12.) This argument ignores, first of all, that the democratically elected UHW Executive Board, approximately three-fourths of whom are rank-and-file members, created the Education Fund and authorized UHW contributions to the fund of up to $6 million. (UHW Ex. 14; see Borsos 9/27 Tr. 194:17-195:1; Brennan Tr. 295:7-296:14.) The Executive Board is UHW’s top decision-making body and is elected by UHW members to set the programmatic direction of the union. Secondly, as admitted by International monitor Bob Hauptman, all of the Education Fund expenditures were completely appropriate for UHW and could have been made out of its general fund: Q: If we look at all the expenditures of the fund here on Exhibit 167 – and we’ve talked about them in relation to the PEF Fund – if made out of the general union funds, they would also have been completely appropriate expenditures for a local union; isn’t that true? If they were out of a general fund, I think so.

A:

(Hauptman 9/26 Tr. 116:6-13.) Moreover, UHW’s independent auditor, the accounting firm of Hood & Strong, concluded that “UHW [had] the ultimate control over PEF through board representation,” and, on that basis, consolidated the Education Fund with UHW for purposes of UHW’s audited financial statements. (UHW Ex. 154; see UHW Ex. 126.) It did so after consultation with its Quality Control Reviewer and after gathering relevant information about the relationship

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between UHW and the Education Fund. (Hernandez Tr. 487:1-492:16.) As UHW disclosed to the IRS in its application for tax-exempt status, “[t]he members of the Board of Directors of this non-profit corporation are selected from the approximately sixty (60) officers and members of the Executive Board of the parent organization, the SEIU UHW West,” and the organizations are, therefore, under “common control.” (UHW Ex. 28, Form 1023, Parts V.2.a and V.3.b.) As ultimate verification of that control, the Education Fund returned all unused funds to UHW, nearly $2.9 million of the $3 million contributed to the Fund, at the request of the UHW Board, as soon as that request was made on April 24, 2008. (See UHW Ex. 97 (“the Fund has become a source of unnecessary conflict between UHW-W and the SEIU International”) and UHW Ex. 96 (“the Fund shall forthwith initiate the process of winding down, transferring funds and assets to UHW-W, as requested . . .”.); see also Hernandez Tr. 491:13-21.) The International presented the testimony of expert accountant Nicholas Ross, who concluded based on his review of the Education Fund Articles of Incorporation and Bylaws that UHW did not control the Education Fund for purposes of consolidation of their financial statements. (Ross Tr. 231:8-16.) As Mr. Hernandez of Hood & Strong, UHW’s independent auditor, testified, however, Mr. Ross’s “testimony fail[ed] to address some of the other information that [Hood & Strong was] aware of, because we worked with the audit, namely, the relationship between the two entities and all the other information we gathered as part of the audit, itself.” (Hernandez Tr. 494:18-495:8.) 8 And as expert accountant Clifford Kupperberg, who agreed with Hood & Strong’s conclusions, testified: Mr. Ross “had insufficient evidentiary material to reach a proper conclusion . . . he ignored the facts and looked at the form of the transaction” rather than its substance. (Kupperberg Tr. 516:22-517:11.)9 In fact, in 2004, when Locals 250 and 399 merged into UHW, Mr. Ross’s firm had made a bid to do the auditing work for UHW. (Ross Tr. 244:23-245:11.) He lost that bid because UHW awarded the contract to Mr. Hernandez’ “reputable” firm, Hood & Strong. (Id., 244:23-245:11; 240:24-241:1.) Contrast Ross Tr. 229:17-24 (Ross’s analysis was solely based on two documents – the Bylaws and the Articles of Incorporation); with Kupperberg Tr. 507:1-510:16 (Kupperberg reviewed consolidated financial statements of UHW and the Education Fund, audit letter from
(Footnote continues on next page.)
9 8

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The International has thus presented no evidence to support its claim that the operation of the Education Fund was “financial malpractice” within the meaning of the LMRDA or the SEIU Constitution. The Education Fund was created and operated according to its stated educational purposes, and it remained under the control of the UHW Executive Board. And, as the International has admitted through Mr. Hauptman, all of the Education Fund expenditures were appropriate expenditures of union funds that could have been made out of its general fund. 3. The Education Fund Charge Is Not Timely

Even if there were some substance to the International’s claim that the Education Fund was improperly created or operated, which there is not, there would be no legitimate basis for imposing a trusteeship given the events that followed after March 2008. The Education Fund has been a dead issue for nearly eight months. It was effectively dissolved in April of 2008 at the request of the International. (UHW Exs. 96 and 97.) The vast majority of the funds transferred to the Education Fund were never used, and more than $2.9 million was returned to UHW. (Int’l Ex. 45; Kupperberg Tr. 513:3-9; Hauptman 9/26 Tr. 87:2-13, 102:11-14; Martin Tr. 722:11-14, 724:2-23.) In voting unanimously to cease operation of the Education Fund, the UHW Executive Board noted changed circumstances regarding an anticipated healthcare reform ballot initiative in California and its purpose of avoiding unnecessary conflict with the International. Its April 24, 2008 Resolution stated: WHEREAS, the political landscape has now changed markedly, the anticipated healthcare initiative that was to have been placed on the ballot in California never materialized, and the establishment of the Fund has become a source of unnecessary conflict between the UHW-W and the SEIU International diverting attention from our mission of promoting the interests and welfare of the UHW-W membership by all means possible . . .
(Footnote continued from previous page.)

independent auditor at Hood & Strong, Record of Consultation from Hood & Strong, Articles of Incorporation, Bylaws, the Education Fund’s IRS Form 1023, a resolution from the Board of the Education Fund, and a resolution from the Executive Board of UHW.)

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(UHW Ex. 97 (emphasis added).) The Education Fund board unanimously resolved the same day “that the Fund shall forthwith initiate the process of winding down, transferring funds and assets to UHW-W, as requested, while retaining sufficient funds needed to wrap up its affairs and go out of business.” (UHW Ex. 96.) By April 29, 2008, the Education Fund had returned approximately $2.8 million to UHW, which had deposited those funds in a segregated account. (See UHW Ex. 99-A.) By June 10, 2008, the Education Fund had returned $2,939,794.14 and office equipment valued at more than $15,000 to UHW. (Int’l Ex. 45.) Having demanded that the Education Fund return funds to UHW,10 the International now suggests, through the testimony of attorney expert Michael Trister,11 that the Education Fund’s return of funds to UHW could result in loss of tax-exempt status by the Education Fund. (Trister 9/26 Tr. 199:10-200:20.) As attorney expert Gail Harmon explained, however, return of funds to a donor is not uncommon when a 501(c)(3) organization has a failed purpose. (Harmon Tr. 427:22-428:22.) In her opinion, return of the funds will have no tax consequences for UHW. (Id., 429:4-14.) And it is also likely to have no tax consequences for the Education Fund: Most likely, it would create no federal tax issues for the organization. In the extreme case that the organization was found to have done something that was improper, and that would lead to a revocation of tax-exempt status, in almost all cases, revocations are prospective rather than retroactive. The International stated numerous times in its own documents that it demanded that the monies that UHW transferred to the Education Fund be returned to UHW. See, e.g., UHW Ex. 189, at 2 (“This week, SEIU filed a lawsuit against the ten UHW-W officers in charge of the outside fund to compel them to return $3 million of your dues money to the UHW-W treasury and to prevent any future transfer of members’ money to this fund.”); SEIU v. Rosselli, No. 0802777 (C.D. Cal. Apr. 29, 2008 (International’s complaint against Education Fund board members demanding that defendants return all monies that UHW transferred to the Education Fund). As noted above, the UHW Executive Board and the Education Fund board voted to return unused funds to UHW on April 24, 2008, four days prior to the International filing its lawsuit on April 28, 2008. The International’s 501(c)(3) expert, Michael Trister, failed to disclose that he has worked for the International in the past. UHW Exhibit 206, Ex. L, includes a Power of Attorney and Declaration of Representative signed by Michael Trister, dated August 29, 2005, for a nonprofit affiliate of the International named “Institute for Change.” Anna Burger at the time was the president of “Institute for Change.” The “Institute for Change” had no “fundraising plan” when it was formed. (See Form 1023 in Ex. 206, Ex. L.)
11 10

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But, if for some reason it’s retroactive, which would be highly, highly unusual, then the organization would become a taxable non-profit[.] [W]ith regard to this organization [. . . ] In each of the two tax years, 2007 and 2008, the expenses exceeded the income of the organization, so there would no tax liability. (Id., 430:3-18; see also Trister Tr. 649:19-650:25 (rebuttal testimony of Michael Trister agreeing that 501(c)(3) organization will have tax liability only if (1) it loses tax-exempt status due to conduct contrary to its educational or charitable purpose, (2) the loss of tax-exempt status is made retroactive, and (3) its income exceeds its expenditures).) The International’s trusteeship power is to be exercised for corrective, not punitive, purposes. (See SEIU Const. Art. VIII, § 7(a) (“Whenever the International President has reason to believe that, in order to protect the interests of the membership, it is necessary to appoint a Trustee for the purpose of correcting corruption or financial malpractice . . . .”).) Whatever issues, if any, were created by the creation and operation of the Education Fund, and by its ceasing operations and returning funds to UHW at the International’s request eight months ago, there is no basis to conclude that imposition of a trusteeship is necessary to address those issues. B. Charge 3: UHW’s Deposit of $500,000 into Its Lawyer’s Client Trust Account Was Proper and Provides No Basis for a Trusteeship

Like Charges 1 and 2, the International’s Charge 3 alleges that UHW should be put in trusteeship for taking steps to resist trusteeship – because it put $500,000 in its lawyer’s client trust account for the purpose of defending its members’ federally protected rights and resisting imposition of a trusteeship. (Amended Notice, at 7-8.) As established at the trusteeship hearing, (1) the funds were placed in the client trust account only after it became clear that UHW and its members would need to devote substantial resources to defending their legal rights and resisting unlawful imposition of a trusteeship, (2) those funds can be drawn from only to pay bills submitted by the lawyer for work authorized by UHW and only to the extent allowed by law, (3) UHW can direct return of any unused funds deposited in the client trust account at any time, and (4) UHW and its lawyers understood and agreed that, in the event a trusteeship was imposed,

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the trustee would control the UHW funds in the client trust account. There is absolutely nothing improper about UHW’s retention of legal counsel to defend its members’ rights or its payment into the client trust account; that retention and payment provide no basis under the SEIU Constitution for imposing a trusteeship. At a meeting on March 7-8, 2008, the UHW Executive Board voted unanimously “to approve immediate payment to Siegel &LeWitter of Oakland California of up to five hundred thousand dollars to be placed in its client trust account, to be billed against pursuant to a retainer agreement with the firm . . .”. (UHW Ex. 53, at 4.)12 UHW President Sal Rosselli had suggested authorization of up to $250,000, but the Executive Board approved up to $500,000 at the suggestion of a rank-and-file board member, Tony Aidukas, because it felt under siege from the International and anticipated extensive litigation. (Rosselli Tr. 970:3-971:3.) Mr. Rosselli transferred $25,000 of the authorized amount to the client trust account shortly after the meeting. (Id., 971:4-16.) He transferred the remainder of the authorized amount on March 31, 2008, at a time when Siegel & LeWitter was preparing a Title I LMRDA lawsuit against International officers, which would be filed on April 8, 2008, and after President Stern had made allegations in a March 24, 2008 letter that were a clear prelude to possible proceedings to impose a trusteeship.

The International has alleged that UHW failed to produce minutes of the March 7-8, 2008 meeting when originally requested by President Stern in a March 24, 2008 letter (UHW Ex. 59). As evidence at the hearing demonstrated, any failure to provide the minutes at that time was inadvertent and resulted from the process of approving and preparing those minutes. Those minutes were not approved until the March 29, 2008 Executive Board meeting, and were not prepared in final until April 1, 2008. (See UHW Ex. 64, at 1; UHW Ex. 179; Rogers Tr. 369:7371:6 (testimony of Natashia Rogers).) When President Stern made his March 24, 2008 request and when UHW responded to that request by March 27, 2008, as requested by President Stern, there were no approved minutes for the March 7-8 Board meeting. (Rogers Tr. 369:7-371:6.) Executive Board minutes are considered only drafts and not actual minutes until approved by the Board. (Id., 372:5-18 (testimony of Natashia Rogers) (“[T]hey’re draft minutes. They’re not actual minutes . . . .”), Martinez Tr. 338:18-339:8 (testimony of Pamela Martinez) (“minutes aren’t really minutes until they’re approved by the Board”). (See also Hauptman 11/12 Tr. 83:512 (SEIU monitor stating that under this protocol, he would not send draft minutes either).) The International knew about the March 7-8, 2008 Executive Board meeting because it was announced on the UHW 2008 calendar, which UHW sent to International officers. (Martinez, 340:1-341:25; Rogers, 385:12-386:4; UHW Ex. 208.)

12

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(Id., 971:10-972:11; Siegel Tr. 805:17-806:10; Int’l Ex. “Litigation”, pp. 624-37 (Complaint in Byers v. SEIU, No. 08-1870 (C.D. Cal. Apr. 8, 2008)); UHW Ex. 59; Borsos 11/12 Tr. 163:7-15. The International argues in the Amended Notice that the payment to the client trust account was improper because the resolution approving it referred to legal defense of UHW’s “membership and officers” (Amended Notice, at 8). It ignores the fact that the resolution provides that legal fees will be paid from the client trust account only “to the greatest extent allowed by law in order to provide any and all legal defense of the membership and officers. . . .” (UHW Ex. 53, at 4 (emphasis added); Hauptman Tr. 64:11-20.) Moreover, Mr. Siegel’s testimony at the trusteeship hearing established that no funds from the client trust account have been used to defend UHW officers, despite the fact that individual officers have been sued in two lawsuits by the International. (Siegel Tr. 795:11-796:14 (“It’s my understanding that that would be inappropriate, so we are not doing that.”).) Mr. Siegel’s testimony also established his clear understanding that, in the event of a trusteeship, the client trust account would be under the control of the trustee, who would then speak for UHW: A: The retainer agreement, very specifically, speaks to [what would happen if the attorney-client relationship between UHW and Siegel & LeWitter ended], if we are terminated for any reason by anyone who speaks on behalf of UHW, that all the client trust money is returned to the UHW . . . – or – you know, I would say because, it’s always their money, I don’t know if return is the right word, but – we send it back to the UHW to hold directly, instead of indirectly, through our trust account. Would it matter which individual’s controlling UHW? No, it wouldn’t. Whoever has the right to speak for UHW, can terminate our firm and demand the money sent back. . . . . If a trusteeship is imposed and there’s a balance of UHW’s money in the client trust account, who had control of that money? The trustee, I presume, would control the money. The trustee speaks for UHW in that circumstance. So, whoever speaks for UHW would control the money?

Q: A: Q:

A: Q:

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A: Q: A:

Correct. So, if a trustee takes over UHW, could the trustee demand the money back? Certainly. * * * * * * *

Q: A:

What is your understanding that you would do if a trusteeship is imposed on UHW? Well, if you really want my opinion, I would expect the trustee would contact me and fire me; that’s what I would anticipate. But, if that were not to occur, I would contact the trustee and apprise the trustee of my existence, what we’re working on, the existence of a trust account, how much money we have. I would, you know, honestly, convey all the information.

(Id., 796:15-797:21, 798:19-799:3.) Moreover, UHW officers who made arrangements for the Siegel & LeWitter retainer agreement and client trust account shared this understanding. Dan Martin testified as follows: Q: A: Q: A: Q: Were you involved in the setting up of the retainer agreement with Siegel & LeWitter? Yes, I was. What was your role? Basically, working with counsel – UHW counsel – and Mr. Siegel to put the retainer agreement together. Okay, as a result of your involvement, did you have an understanding of what would happen to any amount remaining in the client trust account if trusteeship was imposed? Sure. If the trustee asked for the funds back, they would go back to UHW, because they would be in control of UHW, and the Trust was in control of UHW.

A:

(Martin Tr. 671:11-671:24; see also Rosselli Tr. 972:18-973:12, 975:6-9 (“my absolute understanding is that, if there were a trusteeship imposed, the Trustee of the Union – UHW – would have control of these funds”).

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UHW has the right to engage legal counsel to defend its members’ federally protected rights to democratic control of their union and to resist imposition of a trusteeship. (See Hauptman 11/12 Tr. 64:21-65:6, 74:20-22 (SEIU monitor Bob Hauptman acknowledging that “certainly” UHW has this right and that litigation can be expensive).) Funds authorized by the UHW Executive Board and transferred to the Siegel & LeWitter client trust account have been used only for lawful and appropriate purposes. (See Siegel Tr. 794:16-21.) Nor is there any evidence that they were intended to be used for any unlawful purpose. The creation and funding of the Siegel & LeWitter client trust fund account provides absolutely no basis for imposing a trusteeship on UHW. C. Charge 4: UHW’s Use of a Mailing List Received from an Anonymous Source with No Stated Restriction to Communicate with Convention Attendees About Matters of Policy Debate Within SEIU Is Not a Basis to Impose a Trusteeship

The International charges finally that UHW should be put in trusteeship because it “wrongfully converted the International Union’s convention delegate database.” (Amended Notice, at 8.) This charge, which is based on UHW’s receipt and use of a mailing list from an anonymous source, also provides no basis for trusteeship. Testimony at the trusteeship hearing established that, after the June 2008 SEIU Convention, UHW received an electronic mailing list from an anonymous source. (Borsos 11/12 Tr. 205:7-22; 206:3-6.) The list was not identified as confidential or proprietary or as the property of SEIU, and there was no indication of any restrictions on its use. (Id., 206:6-22. UHW merged the electronic mailing list into an existing mailing list and used that list for certain mailings. (Borsos 11/12 Tr. 207:23-208:4.) As SEIU monitor Bob Hauptman conceded, each of those mailings addressed matters that had been subjects of discussion at the SEIU Convention and that continued to be matters of policy debate within SEIU. (Hauptman 11/12 Tr. 84:1786:10; see Int’l Ex. 50 and 47.)13 As the International has admitted, the Convention is the highest governing body within SEIU, and its delegates include most officers of SEIU and its affiliates who collectively
(Footnote continues on next page.)
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Trusteeship is to be imposed under the SEIU Constitution only when necessary in the interests of the membership “for the purpose of correcting corruption or financial malpractice, assuring the performance of collective bargaining agreements or other duties of collective bargaining representatives, restoring democratic procedures, or otherwise carrying out the legitimate objectives of this International Union . . . .” (SEIU Const. (Art. VIII, § 7(a).) By no stretch of that standard can UHW’s use of a mailing list from an anonymous source to make mailings to convention attendees regarding matters of policy dispute within SEIU be considered a proper basis for imposition of a trusteeship. V. THE INTERNATIONAL PRESIDENT’S ATTEMPT TO IMPOSE A TRUSTEESHIP ON UHW IS RETALIATORY AND POLITICAL AND IN BAD FAITH A. The International May Not Impose a Trusteeship in Bad Faith

A trusteeship is illegal if it is not established or maintained in good faith for a purpose allowable under the LMRDA. See Benda, 584 F.2d at 318. A “union’s desire to control dissident elements is insufficient to support the imposition of a trusteeship.” Id., at 316-17 & n.6. Evidence of bad faith includes actions taken “contrary to the international’s best interests, out of self-interest, or in an unconscionable or outrageous way.” Carpenters & Joiners Local 48 v. Carpenters & Joiners, 920 F.2d 1047, 1055 (1st Cir. 1990) (applying bad-faith test in context of a merger forced by an international); Int’l Bhd. of Teamsters v. Local Union No. 810, 19 F.3d 786, 794 (2d Cir. 1994) (applying test for bad faith in context of an emergency trusteeship imposed by an international for financial corruption). It also includes actions motivated by “caprice” or “hostility.” Hansen v. Guyette, 636 F. Supp. 907, 910-11 (D. Minn. 1986), aff’d, 814 F.2d 547 (8th Cir. 1987); see Elec. Workers Local 1186 v. Eli, 307 F. Supp. 495, 505 (D. Haw. 1969).
(Footnote continued from previous page.)

formulate and implement union policies between conventions. (Response by Int’l President to Proffers by UHW, Nov.7, 2008, at ¶ II.B.3 (p.21); Compare UHW’s Proffer of Facts re Charges 3 and 4, Oct. 31, 2008, at ¶ B.3 (p.3).)

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In circumstances analogous to this case, a federal district court in Connecticut invalidated a trusteeship that had been imposed purportedly to correct corruption or financial malpractice. United Foods & Commercial Workers Int’l Union v. Retail Store Employees Union Local No. 919, 104 L.R.R.M. 2089, 2095, 1979 U.S. Dist. LEXIS 10842, at *15 (D. Conn.), aff’d without op., 614 F.2d 1291 (2d Cir. 1979). The international had conducted a financial audit and charged irregularities such as double reimbursement of 13 expenditures; approval of expenditures without appropriate supporting documentation; and the failure of the local president to submit in proper form an itemized statement of expenditures to the local’s Executive Board. Id. The international also cited the termination of the audit, the removal of union records by the president to his home, and transfer of the local’s bank accounts to a different bank as additional grounds. Id., at 2093-94, *15-16. The court rejected these charges as pretextual and not justifying a trusteeship: The Court finds that none of the circumstances in this instance warrant the imposition of a trusteeship; and further finds that the trusteeship was not in fact imposed because of these claimed irregularities. Rather the trusteeship was imposed because of the personal animosity existing between Espinosa [president of the Local] and Wynn [president of the International] and because of the latter’s desire to seize the opportunity to remove the former as the president of Local 919. Id., at 2094, *16. The court found that none of these alleged financial matters constituted corruption or financial malpractice. Id., at 2994, *16-22. The most serious charge was the interruption of the audit, but the local’s president “took that action in good faith, believing the audit to be a frame-up or a pretext to oust him from his position as local president and that it was designed as a mechanism for the International to assume control of the Local.” Id., at 2095, *21. Accordingly, the court concluded that the trusteeship was “arbitrary and carried out in bad faith.” Id., at 2095, *22. Similarly, the court in United Brotherhood of Carpenters & Joiners v. Dale, 118 L.R.R.M. 3160, 1985 U.S. Dist. LEXIS 22753 (C.D. Cal. 1985), aff’d in part, rev’d in part in unpublished opinion, 1986 U.S. App. LEXIS 30564 (9th Cir. Feb. 24, 1986), invalidated a

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trusteeship where members of the International “conspired to quiet those who oppose them or actions by them taken in violation of the Constitution and Laws.” Id., at 3166, *24. After reviewing the factual record, the court held that the International sought to impose the trusteeship in “bad faith” because the intent behind establishing the trusteeship was to chill the free speech and voting rights of members of the local union. Id., at 3167-68, *27-30. The court also found that the International’s actions constituted “unclean hands” and “involve[d] unconscionability and bad faith.” Id., at 3168, *30. B. The International Seeks to Impose a Trusteeship on UHW for the Bad-Faith Purpose of Stifling Dissent

The International is attempting to impose a trusteeship based on trumped-up charges, similar to those in the Local 919 case, with the bad-faith motive, similar to that in the Dale case, of ousting UHW’s democratically elected leaders and quieting dissent from UHW. This trusteeship hearing is not about an honest attempt by the International to correct financial malpractice or corruption. Indeed, there is no allegation of personal financial misappropriation. On the contrary, the evidence is overwhelming that the International has engaged in an extended retaliation campaign to implode or take over UHW by any means necessary because UHW has opposed the International’s bargaining strategy and overall policy direction for the union. As recognized by Professor Lichtenstein and over 100 leading academics and independent educators, this is an attempted political trusteeship. The International has acted in bad faith, arbitrarily, out of self-interest, and in outrageous and unconscionable ways. For these reasons alone, the Hearing Officer should recommend against the imposition of a trusteeship. 1. UHW Has Dissented from the International’s Policies Regarding the Direction of SEIU and SEIU’s Vision for the Labor Movement

For some years now, UHW has disagreed with the SEIU International leadership on the policy direction for SEIU and its vision for the labor movement. UHW believes in a democratically led, rank-and-file controlled labor movement, in which members are empowered to make decisions about their working conditions and their union. UHW believes that contract

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standards should be high for workers and that union growth and high contract standards go hand in hand. In contrast, International President Stern believes in centralized, top-down decisionmaking, and has emphasized growth at the cost of sacrificing contract standards for its members. As Mr. Borsos testified: We have a different point of view than Andy Stern on healthcare reform; We have a different point of view than Andy Stern on how to do collective bargaining; We have a different point of view than Andy Stern on the political process; We have a different point of view than Andy Stern on whether members should actually have a relationship with the Union, or it should be done by a couple [of] people in Washington, D.C. We have a political difference of opinion. ... Are our members going to be involved in the bargaining process? We say yes; Stern says no. Should members have the right to strike? We say yes; Stern says no. Should members have a right to see their contracts? We say yes; Stern says no. (Borsos 11/12 Tr. 150:11–152:6.) UHW has long been critical of the International’s bargaining strategy and expressed that criticism within SEIU. For example, in April of 2006, UHW prepared a white paper entitled “Building a National Healthcare Workers’ Movement.” (UHW Ex. 238, at 17-18.) This white paper criticized the Nursing Home Alliance, the International’s agreements with Compass and Sodexho, and other policies and agreements by the International. Mr. DeBruin admitted in his testimony that, by October of 2007, his relationship with Mr. Rosselli had been “significantly strained over the last couple years,” i.e., since 2005. (DeBruin Tr. 1271-72; Int’l Ex. 126.) At the time, Mr. DeBruin believed that the strain was

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based on honest and heartfelt disagreements. (DeBruin Tr. 1273:6-1274:2; Int’l Ex. 126.) In October 2007, Mr. DeBruin wrote that the basis of his disagreement with Mr. Rosselli was the programs that UHW was putting forth. (DeBruin Tr. 1274-75; Int’l Ex. 126.) Mr. DeBruin wrote an October 9, 2007 memo, which identified major points in UHW’s program and stated that it was UHW’s program that was the basis for his difference with UHW. (DeBruin Tr. 1275:4-20; Int’l Ex. 126.) Shortly after preparing this memo, Mr. DeBruin sent it to Andy Stern. (DeBruin Tr. 1277:5-17.)14 a. UHW Clashed with the International over Bargaining Strategy Regarding the California Nursing Home Alliance

The bargaining with the California Nursing Home Alliance provides a case study of the policy clash between UHW and the International. The California Nursing Home Alliance was an agreement memorializing a relationship between 15 nursing home employers (about 25% of the industry) and UHW, Local 434-B (predecessor to 6434), and the International. (Vellardita Tr. 535:2-14.) As originally conceived, in exchange for SEIU achieving legislative goals, particularly reforming the reimbursement system for Medi-Cal (the California Medicaid program), the Nursing Home Alliance promised to give SEIU organizing rights for about 42 nursing homes. (Id., 535:15-20.) Although UHW agreed to the Nursing Home Alliance agreement in 2003, UHW viewed it as a temporary measure. (UHW Ex. 218; Vellardita Tr. 537:9-17 and 543:20-544:2.) UHW has opposed the basic structure and limitations in the Alliance Agreement from the early years. On September 22, 2005, UHW sent a submission to International officers Gerald Hudson and Anna Burger articulating UHW’s dissent as to numerous aspects of the Alliance Agreement —

Mr. DeBruin, without question, is aligned with Andy Stern. Since 2005, he has been on the International payroll. (DeBruin Tr. 1278:20-1279:15.) He further admitted: “I absolutely support the program and direction of the Union under Andy Stern, today.” (DeBruin Tr. 1288:34.) As detailed within, Mr. DeBruin — as the representative of the International — made many materially false statements at the trusteeship hearing. (See, infra, Section V(B)(2)(q).)

14

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including its effects on organizing rights, template agreements, collective bargaining, and tort reform. (UHW Ex. 218.) (i) During Renegotiations, UHW Advocated Turning Template Agreements into Full CBAs, While the International Supported Continuing the Template Agreements

The Nursing Home Alliance agreement initially called for template agreements to set the terms of employment for UHW’s members. These template agreements were a stripped-down version of a traditional collective bargaining agreement. (Vellardita Tr. 536:25-537:8.) An example of a template agreement is UHW Exhibit 193. Of the 42 homes offered by the Alliance, 33 had Template Agreements; all of the homes given to Local 6434 were templates. (Id.) The template agreements were deficient in many respects. They prohibited striking; they did not provide a grievance procedure with arbitration for anything but termination; and they (reading the template agreements together with the Alliance Agreement) prohibited workers from speaking out about resident care or patient abuse. (Id., 538:9-539:24.)15 They lacked a wage scale and did not address vacation and time-off benefits or seniority rights. (Id., 540:5-541:8, 545:1-17.) The template agreements together with the Alliance Agreement forbade certain employee speech about unionization efforts. (Id.; Kumar Tr. 848:4-850:5.) They prevented the
15

As Mr. Vellardita explained: Our members are caregivers. They do this work because they have a special spot in their heart. They care for the people they take care of; and, in order to fully take care of them, to their best, they have to have the ability to speak out for them. And in these homes, in particular, these are the most vulnerable of folks: the frail, the disabled, people that are on their deathbed. There is nobody there during those days to take care of them and speak up for them except the caregiver; so it’s an absolute, important right for our members to have.

(Vellardita Tr. at 539:6-16.) Under the template agreements, if a worker speaks out about patient care issues, the employer can contact the International and make a complaint for violating the Alliance Agreement. (Id., 596:19-24.) This has, in fact, happened with regard to UHW members at the Horizon West, Beverly, and Kindred facilities. (Id., 596:24-597:1.)

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union from taking a meaningful public position contrary to that of the employers on any matter relating to the regulation and reimbursement of nursing homes. (Id., 855:4-8.) In contrast, a typical UHW CBA included the right to strike; the right to arbitrate any violation of the contract; a broad scope of negotiations to the extent permissible by law; wage scales; all paid time off; benefits; vacation pay; holidays, sick leave, bereavement and jury duty; and all benefits, including pension, health, life insurance, dental, and vision. (Id., 545:3-21.) Despite the drawbacks for UHW’s members in the template agreements, the International supported continuing the template agreements when the Alliance Agreement was up for renegotiation. That support continues even today. Thomas DeBruin admitted: “I support the idea of template agreements, and that I think that, you know, the idea of bargaining — that the Alliance strategy, I think, in general, was a solid and a successful strategy and one that was important.” (DeBruin Tr. 1256:8-21.) He voiced that opinion vigorously. (Id., 1256:14-15.) And UHW opposed that view vigorously. (Id., 1254:16-19.) Mr. DeBruin admitted that this issue was “absolutely” a bone of contention between the International and UHW. (Id., 1256:2021.) He felt that UHW’s strategy was a mistake, and he continues to believe it was a mistake. (Id., 1257:3-6.) The International, in an April 2, 2006 submission regarding jurisdictional hearings (UHW Ex. 217; DeBruin Tr. 1263:8-19), described the clash between UHW and the International as a clash of paradigms. (Id., 1267:20-22.) The International stated: While L2005 [UHW] has participated in the campaign it has never philosophically agreed with the thrust of the campaign . . . . The clash over paradigms also plays out in the approach to collective bargaining. The two Locals come to collective bargaining from two very different traditions; L434B’s [Local 6434] homecare roots lead it to focus on political models of organization and area standards bargaining. L2005 [UHW] has a shop floor tradition of organization and a contract by contract approach to bargaining. One approach leads very naturally to taking the fight to Sacramento and a pragmatic relationship with providers, the other to daily clashes and deep distrust of the operators. The growth strategy that has been adopted [by the Long-Term Care Division of the International] fits naturally with L434B’s approach, but flies in the face of L2005’s orientation.

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(UHW Ex. 217, at 9-10 (emphasis added); DeBruin Tr. 1271:1-4.) (ii) The International Attempted to Force UHW’s Members to Accept the Template Agreements and Froze UHW Out of the Nursing Home Alliance Negotiations

Negotiations around the renewal of the Alliance Agreement began around January 2007. Although UHW represented 75% of the workers affected by the Alliance Agreement, it was given only one of three votes, the other two controlled by the International and Local 6434. (Vellardita Tr. 546:11-547:16.) At the outset of bargaining, the position of the International and Local 6434 was to continue the remaining template agreements. (Id., 542:15-543:7.) The International was interested in “growth at all costs” and was willing to sacrifice achievement of full-blown collective bargaining agreements (CBAs) in order to achieve that growth. (Id., 543:3-7.) UHW’s position was that there should be no new templates, all existing templates should be converted into full CBAs, and SEIU should have organizing rights for all the homes represented by the Alliance operators, without condition. (Id., 542:22-544:20.) The Alliance operators’ position was that the number of template agreements should expand. Indeed, their initial, formal proposal was for 50-year template agreements. (Id., 549:3-6; 618:22-24.) After the initial presentation, the Alliance operators made it very clear that two visions existed and that their preference was for the vision articulated by Local 6434 through Tyrone Freeman — not UHW’s vision. (Id., 547:2-11, 550:17-551:6.) In the negotiations, the nursing home operators presented proposals that literally said that they would prefer not to have UHW as party to the contract. (Id., 547:10-11.) As a result, the International froze UHW out of the negotiations and met with the Alliance employers without UHW. (Id., 551:20-552:4.) UHW presented a petition signed by 3,300 members to Gerald Hudson and Dave Regan, who were on the SEIU Executive Committee of the National Nursing Home Unity Council, demanding that UHW be part of the negotiations. (Id., 553:3-554:4.) The International ignored the petition. UHW representatives never returned

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to the bargaining table. (Id., 554:5-9.) After Messrs. Hudson and Ragen took over bargaining, they failed to reach an agreement. (Id., 554:16-555:1.) (iii) The International Attempted to Undermine UHW’s Attempts to Enter CBAs with Alliance Employers

After the International failed to reach an agreement, UHW and Local 6434 began negotiating directly, and separately, with Alliance employers for contracts expiring on June 15, 2008. (Id., 555:2-19.) The International and Local 6434 interfered, however, with UHW’s negotiations and demonstrated their intent to use the long-term care jurisdictional changes and this trusteeship hearing as weapons to “implode” UHW. First, before UHW was able to settle a CBA, Local 6434 reached an agreement around June 12, 2008, covering about 25 nursing homes – half of the homes that the local represented. That agreement extended the template agreements and provided no new rights to workers. (Id., 556:5-9.) Local 6434’s concession made it harder for UHW to negotiate a full CBA. Second, in retaliation against UHW and in an effort to prevent UHW’s strategy to win rights for its members, the International pressured employers not to enter into CBAs with UHW. Employers — including Mariner and Sava — said that they were getting pressure from SEIU International President Andy Stern and Scott Carlson (representative of the former Alliance employers) not to reach an agreement with UHW. (Id., 557:2-561:12.)16 The International used the long-term care jurisdictional hearings as a weapon against UHW and admitted its strategy to implode UHW by moving its 65,000 long-term care members out of UHW. As part of the pressure on employers not to enter into a CBA with UHW, Scott Carlson and the International told employers Mariner and Sava that there would be a jurisdictional change and that the employers “wouldn’t have to deal with UHW,” that they would be able to deal directly with the International and Local 6434. (Id., 559:17-561:12.)

Sava’s representative, Devon Lichner, told Vellardita on June 14, 2008, that Sava and Mariner were being pressured not to settle with UHW. (Id., 559:17-560:9.)

16

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Josh Sable, who was representing Alliance operators Country Villa and Windsor, contacted Mr. Vellardita the week of the Trusteeship Hearing, on November 11, 2008, and told Mr. Vellardita that Scott Carlson was having regular conference calls with Alliance operators to bring them up to date with the UHW jurisdiction decision-making process, and to pressure them not to reach a deal with UHW because there would be a change. (Id., 560:10-21.) In fact, on one call, when the operators became frustrated that they had been waiting for this jurisdictional change for several months, they asked Carlson when UHW would be out of the picture; Carlson’s answer was “January of 2009.” (Id., 560:22-561:7.) That date coincides, of course, with the scheduled time for a decision in these trusteeship proceedings. (iv) UHW Overcame Hurdles to Agreements with Alliance Employers by Threatening to Strike, a Right the International Was Willing to Give Away

Although the International and Local 6434 were willing to trade away the right to strike and make other concessions, UHW overcame the logjam in the bargaining, which had been exacerbated by the International, by threatening to strike. As a result, UHW reached a landmark agreement with Mariner in June/July 2008 that achieved many “firsts” in the nursing home industry, including principles that were set forth in UHW’s Unity Platform. (Id., 562:12563:20.) The Mariner Agreement tied nursing home workers’ wages to Kaiser wage rates, which are the highest private sector wage rates in California. (Id., 562:17-19.) The agreement provided a code of conduct for organizing, allowing workers to join the union without strings attached; third-party mediation of any staffing, quality improvement, and workload issue disputes; and job protection around successorship, so that if a company is sold, the workers and the contracts go with it. It was the best contract in the industry at the time. (Id., 562:22-563:20.)17 Vellardita also explained in his testimony the winning of a UHW CBA with Horizon West, an operator with whom UHW had previously had a template agreement under the Alliance. (Vellardita Tr. 564:12-14.) It included a right to strike; right to speak out; right to arbitrate on the issues; right to bargain benefit issues; seniority; wages tied to the hospital industry; wage increases; code of conduct for organizing; successorship language; daily cancellation protection; and third-party mediation of quality care, staffing, and workload issues. (Id., 564:16-565:11.)
17

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(v)

If a Trusteeship Is Imposed, the International Will Likely Sell Out Healthcare Workers by Entering Template Agreements

The International, through its trustee operating Local 6434, has reached agreements with several southern California nursing homes that essentially perpetuate the template agreements. (Id., 565:22-566:18; see UHW Ex. 199 (comparing UHW’s CBA with Local 6434’s template agreement.) UHW still has open contracts with some nursing home employers. If the International were to take over the bargaining process now, the International would likely perpetuate the template agreements and set back all of the hard work and advances that workers have made, not just in the recent round of negotiations, but also in the larger fight for workers’ and patients’ rights. (Id.) b. UHW Clashed with the International over Tort Reform

The clash of paradigms between UHW and the International has included disagreement over tort reform efforts in California. The Nursing Home Alliance Agreement made tort reform a priority in exchange for SEIU’s right to organize more nursing homes. (Kumar Tr. 850:14852:15.) It required the parties to “undertake a legislative support campaign for tort reform, budget issues and rate reform.” (UHW Ex. 214, at 7 (¶9).) That provision also spelled out a plan to engage in actions including rallies, press conferences, white papers, phone banking, letter writing, and lobbying Sacramento in support of tort reform and rate reform. (Id.) The agreement also required “the parties unanimous agreement on tort reform strategies,” that specifically included seeking “consumer support for tort reform strategies throughout the life of the Agreement.” (Id., at 5 (¶4).) The International agreed with the nursing home employers to promote tort reform in California, which would limit the rights of victims to sue employers. UHW has opposed tort reform as harmful to its members and the public. (Kumar Tr. 852:2855:17; Vellardita Tr. 539:5-16 (“Our members are caregivers. They do this work because they have a special spot in their heart. They care for the people they take care of; and, in order to fully take care of them, to their best, they have to have the ability to speak out for them.”).)

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As the International has acknowledged, policy differences “came to a head over the debate on tort reform where the Local [UHW] led the internal fight to block SEIU’s support to resolve this issue in California . . . .” (UHW Ex. 217, at 9.) Indeed, UHW’s September 25, 2005 submission to Gerald Hudson and Anna Burger stated: The entire Tort reform fiasco of this past year entails problems that include bad policy, bad politics and our own bad internal process. The Alliance employers’ demands, agreed to by SEIU without consultation or involvement by UHW, other Divisions, the California State Council or our traditional allies, were neither good public policy nor politically winnable. The demand that we push through the tort reform package agreed to by the employers and the Long Term Care Division staff showed a lack of understanding of our overall relationships in the state capitol and with the coalitions that work with us on numerous issues. (UHW Ex. 218, at 3, No. 4.) That submission explains how the International’s long-term care staff excluded UHW from tort reform discussions and misled employers about the level of UHW’s support for tort reform. (Id.) c. UHW Clashed with the International over Bargaining Strategy Regarding Tenet HealthCare

The negotiations with Tenet Healthcare also demonstrate the differences in bargaining strategy between UHW and the International. (i) UHW Dissented from the International’s Bargaining Strategy with Tenet Healthcare

Tenet Healthcare is a for-profit hospital corporation with its biggest market in California. (Lewis Tr. 741:25-742:6.) UHW represents employees in 14 of their 17 hospitals. (Id., 742:6.) In late 2006, bargaining proceeded with Tenet. At one point in a meeting, Tenet said that it would allow organizing in currently non-union facilities outside of California if the organized workers in California would give them certain economic relief. (Id., 743:4-10; Rosselli Tr. 930:14-18.) Tenet, UHW members, and the International tentatively concluded that, if UHW’s Tenet members deferred negotiating a defined benefit pension plan and retiree health insurance, then Tenet would not oppose organizing of Tenet facilities outside of California, including in Florida and Texas. (Rosselli Tr. 930:19-931:6.) Negotiations at that point proceeded on parallel

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tracks, with UHW negotiating in California, and the International negotiating nationally and in Florida. (Lewis Tr. at 744:17-21.) In December, 2006, the two tracks were consolidated, with the understanding that UHW would continue participating. (Id., 745:10-747:12.) During the course of the negotiations, however, the International did the following, to which UHW objected: x The International excluded UHW’s rank-and-file bargaining team from negotiating across the table with Tenet. (Id., 748:2-12, 752:22-753:15.) x Without UHW’s knowledge or consent, the International agreed to a tentative seven-year contract with no right to strike at the end of seven years, meaning that workers would not have the right to strike for 13 to 14 years. (Id., 748-49; Borsos 9/27 Tr. 93:19-94:6.) x Without UHW’s knowledge or consent, the International agreed to allow Tenet to subcontract out 12% of the total number of employees in the bargaining unit — about 840 members, thus giving Tenet the right to fire about 840 UHW members. (Lewis Tr. 756:10-12; Borsos 9/27 Tr. 92:1-10; 93:7-18.) x The International consistently misrepresented what was discussed in bargaining sessions and signed at least two tentative agreements without telling UHW. (Lewis Tr. 754:1-756:8; Borsos 9/27 Tr. 92:1-22, 93:19-94:6.) Despite these concessions to Tenet, the International failed to secure an agreement. (Lewis Tr. 760:9-13; Borsos Tr. 93:1-6.) The International sent in an incompetent team to bargain with Tenet, with results such as the tentative agreement allowing subcontracting of 12% of the workforce that were harmful to UHW members. (Lewis Tr. 754:16-755:2.) Mr. Philiou, the International’s lead negotiator, admitted that he lacked relevant bargaining experience, only having bargained three or four healthcare agreements. (Philliou Tr. 1093:17-1095:22.) In May, 2007, Tenet began negotiating directly with UHW again. (Lewis Tr. 760:14-19.) After months of bargaining, UHW undid the damage caused by the International and concluded a contract covering California hospitals on October 13, 2007, that was ratified on October 26, 2007. (Id., 760:22-761:17, 780:15-16; Borsos Tr. 93:1-6.) The final contract secured a ban on

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subcontracting and, other than pension and retiree health, secured “every single standard” UHW wanted, including the right to strike. (Id., 761:12-15.) (ii) The International Retaliated by Abolishing Rank-andFile Participation in Bargaining

After the Tenet bargaining, the International retaliated by abolishing participation by rank-and-file members in national bargaining. SEIU had employed a mechanism called the Unity Council that allowed all Locals negotiating with the same employer to coordinate rankand-file members’ participation in the bargaining. (Id., 761:18-762:18.) Rank-and-file members had the opportunity to meet other rank-and-file members in other locals and discuss their concerns and develop and implement strategy. (Id., 762:19-763:7.) Following the Tenet negotiations, the International abolished the Unity Councils. (Id., 764:1-3.) They were replaced with a National Bargaining Council, whose membership is controlled by the International’s president, Andy Stern. (Id., 764:12-19.) The abolition of Unity Councils further diminished member participation and union democracy and furthered the concentration of power in the International and in the hands of its president. d. UHW Clashed with the International over Healthcare Reform in California

In 2007, Sal Rosselli was the president of the SEIU State Council, which coordinates SEIU’s legislative political action and public policy work in California. The State Council’s number-one priority in 2007 was preparing for a 2008 ballot initiative or bill on healthcare reform. (Rosselli Tr. 937:6-12.) In early 2007, Governor Schwarzenegger announced a healthcare reform proposal, and the State Council opposed the proposal. (Kumar Tr. 822:2-13.) The Governor’s proposal garnered no legislative support, and members of the legislature introduced their own competing bill, AB-8. (Id., 823:5-16.) The bill passed both houses but was vetoed by the Governor. (Id., 823:19-21.)

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Subsequently, the Governor issued a new proposal, essentially the same as his first proposal. (Id., 825:1-10.) Although the State Council previously opposed the Governor’s proposal and had not yet formulated a response, Andy Stern contacted the Speaker of the Assembly directly urging passage of a healthcare bill. (Id., 826:8-827:19.) This was done outside the normal democratic process used to determine SEIU’s policy positions in California. (Id., 826:19-25.) The State Council and Stern disagreed over what approach to take during the healthcare debate. (Id., 828:17-829:20.) After an exhaustive deliberation process to formulate its position, the State Council found the new bill woefully deficient, and sent a 19-page explanation of the bill’s perceived flaws to the Governor’s office. (Id., 829:21-830:19; UHW Ex. 176.) e. UHW Announced Its Platform for Change to Reform SEIU

In early 2008, UHW announced its Platform for Change. (UHW Exs. 35 and 37.) The Platform for Change advocated for union democracy, organizing the unorganized in core industries with active participation of worksite leaders, and accomplishing universal access to quality healthcare. (Rosselli Tr. 946:12-25.) UHW’s platform was designed to reform SEIU and competed with the International’s program. f. Sal Rosselli Resigned from the International Executive Committee to Speak Out About Undemocratic Practices Within SEIU

On February 9, 2008, Sal Rosselli resigned from the International Executive Committee. (UHW Ex. 44.) This resignation came at the request of UHW’s Executive Board, which approved the resignation letter. (UHW Ex. 46.) It reflected a decision to speak out openly about undemocractic practices within SEIU: In good conscience, I can no longer allow simple majorities of the Executive Committee to outweigh my responsibility to our members to act out of principle on these critically important matters. I say this with no ill will, but with a deep sense of conviction. As an elected leader of UHW and an elected international union vice president, I believe that maintaining my silence about the

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sacrifice of our principles and our failing to give voice to a clear and honest disagreement about the road we are on and the future direction of our International Union is too high of a price to pay. Therefore, my conscience leaves me no option but to resign my position as a member of the Executive Committee, effective immediately. I believe that workers must have a voice. Indeed, that is the central reason I believe in our union. I believe that for workers to have a representative and effective voice, capable of changing their lives and the direction of our nation, many voices must be heard, not just those from Washington. I resign not to walk away, but to stay involved and to be able to speak freely. (UHW Ex. 44, at 4-5.) 2. The International Embarked on a Campaign of Retaliation Against UHW and Its Leaders

As a result of the political and strategy divisions between UHW and the International and UHW’s decision to speak out — first within SEIU and then publicly — the International, under the direction of Andy Stern and Anna Burger, and their staff, including Thomas DeBruin, Stephen Lerner, Bill Ragen, Josie Mooney, and others, have embarked on a campaign to retaliate against UHW and silence it by any means necessary. This campaign started before 2008; it intensified towards the end of 2007; and it became open and belligerent soon afterwards. Those efforts began long before the International raised any issue with regard to the Education Fund or other charges now relied on as a basis for trusteeship. As revealed at the trusteeship hearing, the efforts included a “war council” in the fall of 2007 at which International leaders and their appointed allies at Local 6434 made plans to attempt to discredit UHW leaders. This trusteeship hearing is simply another weapon the International has wielded in its retaliation campaign. a. The International’s Retaliation Resulted from Policy Conflicts and Began Before Sal Rosselli’s Resignation from the International Executive Committee

By the time that the UHW Executive Board decided that it needed to speak out publicly about undemocratic practices within SEIU, and Sal Rosselli resigned from the International Executive Committee, the International had already taken a number of steps to retaliate against

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UHW for opposing the the International on policy matters within SEIU. Those steps, more of which were detailed in Mr. Rosselli’s resignation letter, included: x Unilaterally eliminating the Catholic Healthcare West (CHW) Unity Council three weeks before contract negotiations were to start covering 16,000 CHW employees at 35 hospitals. (CHW is the second largest employer for UHW. (Borsos 11/12 Tr. 221.) The Unity Council is a body coordinated by Local unions which have the same employer. Suspending the Unity Council weakened UHW’s bargaining position against CHW. (Id., 222.)) x In early 2008, reinitiating the 2006 jurisdictional hearings designed to remove UHW’s 65,000 long-term care workers just as UHW was about to enter bargaining for contracts that it had worked for 20 years to synchronize. Andy Stern introduced the jurisdictional dispute in early 2008 at a time when UHW was going into bargaining; nothing required Mr. Stern to do that. This also weakened UHW’s bargaining position. (Id., 224-25.) x Excluding UHW from discussions with the U.S. Conference of Catholic Bishops, even though UHW represented the largest number of Catholic hospital workers in the country, and was involved in the largest Catholic hospital organizing campaign in the country. (See Id., 225-27.) x Interfering with the CHW bargaining campaign by sending Amado David to meet with the bargaining team in an attempt to create division within the local. (See UHW Ex. 73.) x Secretly meeting with Governor Schwarzenegger to discuss healthcare reform without telling SEIU-elected leaders in California or the SEIU State Council. x Encouraging locals in California not to endorse Obama for president, even though SEIU International’s official position was that it would remain neutral and would

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allow locals to determine for themselves whether they wanted to endorse a candidate. (UHW Ex. 44.) The International had also engineered the removal of Sal Rosselli from his position as president of the SEIU California State Council, in the middle of his term, after the SEIU State Council and UHW opposed Andy Stern’s agenda with regard to healthcare reform in California. On October 23, 2007, Andy Stern revoked the State Council’s charter effective October 15, 2007, established a new one, and initiated the removal of Sal Rosselli as president. (UHW Ex. 22.) Stern then appointed a list of leaders, some of whom did not pay any per capita to the State Council because they did not have any membership or because they were leaders of organizing locals. (Rosselli Tr. 939:18-23.) Annelle Grajeda, a Stern appointee who was president of the SEIU California State Council before Sal Rosselli, announced her intention to run for president but lacked the votes necessary to be elected. So, Andy Stern changed the voting rules. He approved a “request” by the leader of Local 6434, Tyrone Freeman, asking that his Local and others that were not in good standing and that had failed to make their per capita payments, still be able to vote. (Rosselli Tr. 939:24-940:8; UHW Ex. 27.) As explained below, Tyrone Freeman and Matthew Maldonado have admitted that Anna Burger led this removal of Mr. Rosselli from the presidency as part of the “War Council’s” attack on UHW. Given this manipulation and apparent political retaliation, Sal Rosselli withdrew his candidacy for president of the SEIU State Council. (Id., 941:20-942:6; UHW Ex. 29.) b. By Late February of 2008, Thomas DeBruin Had Formed a Team of Senior International Staff to Wage an Anti-UHW Propaganda Campaign

The International admits that, by early 2008, it had formed a team to attack UHW. Mr. DeBruin testified that prior to February 29, 2008, he approached Anna Burger about the need to respond to UHW’s public campaign against the International and UHW’s Platform for Change. Ms. Burger assigned Mr. DeBruin to be the “Campaign Program Manager” going into

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the 2008 Convention. Mr. DeBruin and his team intensified the International’s retaliatory campaign against UHW. (DeBruin Tr. 1225:16-1226:23.) Mr. DeBruin admitted that members of his “project” were Stephen Lerner, Bill Ragen, Josie Mooney, Flannery Hauck, and Amado David. Stephen Lerner was responsible for the communication work sent out to UHW members. (Id., 1352:5-9; 1333:4-12.) Lerner supervised Bill Ragen. (Id., 1334:21-1335:10; 1339:15-16.) And, the International paid for their work against UHW out of its general fund. (Id., 1346:16-21.) c. After Mr. DeBruin Had Begun His “Project,” the International Sent the March 24 Letter that Raised Numerous, Unsubstantiated Accusations and Threatened Trusteeship

Shortly after Mr. DeBruin admits to having been engaged in his “project,” the International raised a host of allegations in a March 24, 2008 letter from Andy Stern to Sal Rosselli. (UHW Ex. 59.) The March 24 letter was, without question, in bad faith. It raised not only allegations regarding the Education Fund, but also allegations about numerous other matters such as Nursing Home Chains, a “phony ballot scheme,” “collusion with California Nurses Association,” “developing secret plans to destabilize and decertify bargaining units,” chilling “free speech rights,” and collusion to undermine “talks for teachers in Puerto Rico.” Each of those other allegations has vanished. (Borsos 11/12 Tr. 232-36.) The International clearly attempted to find any charge that it could level against UHW. The March 24 letter was not an attempt to identify and resolve an honest dispute. Indeed, the International disseminated the letter widely. On March 24, 2008 — the very same day the letter was written — Amado David, a member of Mr. DeBruin’s “project,” began disseminating the March 24 letter to UHW’s members. For example, on his own without being solicited, Mr. David sent the letter to Ray Cano — a UHW shop steward — in an effort to organize UHW’s members against UHW. (Cano Tr. 397:8-15, 398:6-8, 399:4-401:8; UHW Ex. 209; Lewis Tr. 739:16-741:2.) The March 24 letter was not an effort to resolve issues, but a propaganda piece to tarnish UHW and to create dissent among UHW’s members.

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d.

As a Member of Mr. DeBruin’s “Project” in California, Mr. David Attempted to Organize UHW’s Members Against UHW

As part of Mr. DeBruin’s “project,” Amado David contacted UHW members and attempted to organize them against UHW. Mr. David’s attempt to influence and agitate Raymond Cano, a rank-and-file shop steward and an Organizing Committee member, demonstrates the International’s intent to implode UHW. In March 2008, Mr. David at his initiative contacted Mr. Cano and asked to meet. Mr. David — unsolicited — sent Mr. Cano a copy of the March 24 letter and additional materials to support the baseless charges in the March 24 letter. (UHW Ex. 209.) During the meeting, Mr. David asked Mr. Cano if he had heard of any concerns or complaints that members had against UHW. (Cano Tr. 395:11-25.) He asked Mr. Cano if there were any members who had claims against UHW. (Id.)18 The International also sent Mr. David to spread anti-UHW propaganda to undermine UHW’s support among its members in the middle of the CHW contract bargaining campaign with Mr. Cano and others. (UHW Ex. 73; Borsos 11/12 Tr. 228:6-229:10.) e. The International Filed Lawsuits Against UHW Regarding the Education Fund and Bombarded the Public and UHW’s Members with Misleading Publicity Regarding the Education Fund

In April 2008, the International filed a lawsuit against UHW Executive Board members regarding the Education Fund and surrounded that lawsuit with massive publicity and an assault on UHW’s members. Like the March 24 letter, the International’s lawsuit and publicity campaign was not an honest attempt to resolve issues. It was a retaliatory propaganda device to attack UHW, to tarnish UHW in the public eye, and to create dissent among UHW’s members.

Barbara Lewis was an International organizer for 18 years. (Lewis Tr. 726:23-727:1.) She explained that Mr. David’s tactic of sending a copy of the March 24 letter to rank-and-file leaders like Mr. Cano was a typical organizing tactic and indicated Mr. David’s intent to organize workers against Sal Rosselli and UHW. (Lewis at 741:3-20.)

18

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In connection with its lawsuit, the International issued a press release that was distributed nationally. (Borsos 11/12 Tr. 185:8-186:18; UHW Ex. 188.) The International’s press release stated: Ten top officers of SEIU local union United Healthcare Workers West (UHW-W) violated federal law and deceived their members when they authorized and diverted millions of dollars in dues money to an outside fund under their exclusive control, according to a lawsuit being filed . . . by SEIU . . . . SEIU is bringing the lawsuit against the ten directors of the fund seeking to return to the UHW-W treasury $3 million in UHW-W members’ money that is known to have been diverted. (UHW Ex. 188.)19 These and other assertions in the press release were false and misleading and presented as fact not allegation. The International neglected to mention that the “ten top officers” included seven rank-and-file Executive Board members and that the transfer was authorized by the Executive Board. The creation of the Education Fund did not violate federal law. As the International knew full well, labor unions regularly form 501(c)(3) organizations. And, the Education Fund deceived no one; it was voted on in an open Executive Board session; it was within the control of the Executive Board; and all Education Fund board members were members of the Executive Board. Moreover, Sal Rosselli wrote an email to Andy Stern on April 28, 2008 — before the press release was issued — stating that UHW and the Education Fund had passed resolutions to return the transferred funds to UHW. (UHW Ex. 98.) The International also held a full press conference on the same day to publicize the lawsuit, without any advance notice to UHW and without allowing UHW to express its side of the story. (See Borsos at 189:6-9.) On April 30, 2008, Anna Burger sent a mailer to all of UHW’s members, which was also posted on the Internet, stating, “Top UHW-W officers transferred millions of your dues money to an outside fund in violation of federal law.” (Borsos 11/12 Tr. 187:12-188:11; UHW Ex. 189.) The International posted similar false statements on its anti-UHW Website — seiufactchecker.org. (UHW Ex. 190.)
19

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It states, “Dear Brothers and Sisters: We recently learned that nearly a year ago the top ten officers of your local union — UHW-W — went behind closed doors and instituted a plan to divert up to $6 million of your dues money to an outside fund controlled by these same officers.” (Id.) Like the press release, this flyer is replete with false and misleading statements, presented as fact not allegation, and was part of a targeted campaign to mobilize UHW’s members against UHW. f. The International Stepped Up Its Plan to Hold False Jurisdictional Hearings to Transfer UHW’s Long-Term Care Members Out of UHW

After the 2006 Dale-Balanoff report left open the issue of jurisdiction over UHW’s longterm care members,20 in late 2007 the International stepped up its plans to transfer about 65,000 of UHW’s long-term care members out of UHW and into Local 6434. As part of its retaliation campaign, the International initiated hearings and generated the “Hudson Report,” with no input from UHW. (Int’l Ex. 87.) As demonstrated in a January 18, 2008 UHW memo responding to the Hudson Report, which details its substantive errors, the Hudson Report was a “political attack on UHW”; it was not “an objective evaluation of the reorganization of long term care jurisdiction in California” but was driven by “internal politics” and was a “retaliatory document designed to paint a disparaging picture of UHW in order to draw a conclusion that UHW should no longer represent long term care workers.” (See UHW Ex. 237 at 2.) In mid-2008, the International reinstituted jurisdictional hearings to transfer about 65,000 long-term care members out of UHW to Local 6434. At the SEIU Convention in June 2008, SEIU passed a resolution stating that all long-term care members will be put into the same Local by state. (Int’l Ex. 100.) The effect of that resolution would be to split UHW in half, with
20

The International’s use of the Dale-Balanoff report to justify the later jurisdictional hearings against UHW is unfair and further demonstrates its bad faith. The International allowed only UHW’s public hospital members and other public sector members (except members at Tuolumne General Hospital) to vote — only around 3,000 members. (Int’l Ex. 82, at 78.) Consequently, approximately 97% of UHW’s 150,000 members were precluded from voting on whether to approve and accept the Dale-Balanoff report even though they will now be affected by the jurisdictional hearings.

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65,000 of its long-term care members being put into a different Local. It would hurt the longterm care members who would be removed from UHW, and would severely harm all UHW members. The International pushed this resolution even though in virtually every state, all healthcare workers are in a single statewide union. (DeBruin Tr. 1246:4-11.) Their purpose in singling out UHW, of course, is to retaliate. g. The International Attempted to Scuttle and Since Then Has Ignored the Vote by UHW’s Long-Term Care Members on Whether They Want to Remain in UHW

In February and March, 2008, UHW conducted an election to determine whether its longterm care workers wanted to remain in UHW, a healthcare workers’ union that has both hospital and nursing home workers, or whether they wanted to join a separate union consisting of longterm care workers only. (Vellardita Tr. 565:21-569:14.) This vote was appropriate. The International’s witness, Mr. DeBruin, admitted that he “would love to listen to the members of UHW” regarding long-term care jurisdiction. (DeBruin Tr. 1290:19.) He admitted that the Local union, including UHW, has the direct relationship with its members, and that it is appropriate for UHW to ask its members what they think about jurisdictional changes, that it is appropriate for UHW to take a referendum, and that the members’ vote should be listened to if it is a democratic vote. (Id., 1292:11-23.) UHW employed an outside, independent, professional vendor, the State Mediation & Conciliation Service, to conduct the election, to protect the integrity of the voting process. (Vellardita Tr. 568:3-7.) UHW’s vendor sent the ballot to 65,000 workers in UHW’s Long-Term Care Division — composed of homecare workers, nursing home workers, and assisted livingfacility workers. (Id., 567:21-568:1; UHW Ex. 41.) The ballot asked these members to choose in a secret ballot: Yes, for UHW, I vote to stay united with hospital, Kaiser, nursing home and homecare workers. No, I think it is okay to be transferred into a union of only long term care workers.

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(Int’l Ex. 11.) The International and Local 6434 did everything in their power to scuttle that vote. Peter Lujan, a representative of State Mediation & Conciliation Service, told Mr. Vellardita that Josie Mooney, a special assistant to President Stern and a member of Mr. DeBruin’s anti-UHW project, told Mr. Lujan not to hold the election. (Vellardita Tr. 568:20-24.) Likewise, an attorney for Local 6434, Beth Garfield, asked Mr. Lujan not to conduct the election. (Id., 568:25-569:3.) During the three-week UHW vote, UHW members received emails from Local 6434 and Tyrone Freeman, such as UHW Exhibit 51, as well as phone calls from around the country (Los Angeles, Illinois, Michigan) urging members to vote against a healthcare workers’ union and encouraging them to vote for a long-term care union. (Id., 570:2-15.) At least 600700 members received re-routed phone calls that falsely showed UHW’s Oakland office phone number on their Caller I.D. (Id., 570:16-571:2.) Mr. Rosselli testified that he can “comfortably and honestly say that there were more electronic communications, pieces of mail, and phone calls from the International Union through 434-B, or 6434, to our members opposing this vote than we sent out supporting it.” (Id., Rosselli Tr. 1050:6-10.) One example was an expensive mailing from Tyrone Freeman, President of Local 6434, encouraging UHW members to support a separate long-term care union. (Id., 1051:4-13, UHW Ex. 219.) That mailer states: “Why are some union officials trying to SPLIT California Workers Apart?” (UHW Ex. 219.) Despite the interference, nearly 70% of eligible nursing home workers (approximately 6,298 of 9,167) voted, of whom 99% (6,232) voted to stay in UHW. (Vellardita Tr. 572:12573:11; UHW Ex. 181 (describing the results of the vote).) This rate of participation in just a three-week period was unprecedented. (Vellardita Tr. 573:6-11) There were 52,844 homecare workers who were eligible to vote, and 19,351 members returned a ballot. (Id., 573:15-19.) This 30% participation rate was significant, particularly compared to an 18% participation rate in previously held elections. (Id., 573:21-574:13.) Of the homecare workers, 18,578, approximately 99%, voted to stay with UHW, and only 773 voted in favor of being transferred

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out. (Id., 574:14-19.) In all, the workers overwhelmingly voted (24,810 ballots out of 25,649) to stay in UHW. (Id.; UHW Ex. 181.) The International, however, has ignored the democratically expressed will of UHW’s long-term care members and is proceeding with efforts to remove them from UHW. Clearly, the International is not interested in honest feedback from UHW’s members but has a different agenda. Regardless of UHW’s members’ wishes, the International has wielded the long-term jurisdictional process as a weapon to “implode” UHW in retaliation for UHW’s disagreements with the International over bargaining strategy and union policy. h. The International’s Own Vote on Long-Term Care Jurisdiction Demonstrates the International’s Intent to Use Jurisdiction to “Implode” UHW

The International’s true motives and ulterior purpose in “imploding” UHW through a dramatic restructuring of UHW’s jurisdiction is further demonstrated by the International’s false vote on the same issue. Rather than conducting a fair vote, the International structured a vote that fails to give UHW’s members an option to remain with UHW in its current form, and then spread false and misleading statements to UHW’s members to mobilize them against UHW. In August 2008, the International made a decision to take an advisory vote (meaning the International Executive Board could ignore the outcome) on California long-term care worker jurisdiction. The vote, however, offers only two options — creation of a statewide long-term care workers union, or, creation of a statewide local for all healthcare workers who are currently members of UHW, 6434 and 521. (Int’l Ex. 103.) Under Option One, UHW would lose 65,000 of its long-term care members. Under Option Two, UHW’s charter would be revoked, and UHW would be dissolved, despite there never having been a hearing to revoke UHW’s charter. Under either option, Andy Stern would have the right to appoint the leaders of the local union. (DeBruin Tr. 1299:6-1302:13.) Accordingly, under either option presented to UHW’s members, UHW as it currently stands will be “imploded.” Despite Mr. DeBruin’s proclamation to respect

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democracy, the International’s jurisdictional election — which Mr. DeBruin supported — gives no option to UHW long-term care members to vote to stay in UHW. (Id., 1301:24-1302:9.) On November 17, 2008, the next business day after the completion of the trusteeship hearing, Andy Stern directed that this skewed vote take place. (UHW Exs. 239 and 240.) The International’s ballot not only offers false options, but also is replete with false and misleading statements in an effort to mobilize UHW’s members against UHW: x UHW Exhibit 240 states: “The SEIU IEB has also received a variety of proposals from UHW-W, Local 6434, and the SEIU Healthcare Division arguing the ‘pros and cons’ of creating a NEW HEALTHCARE LOCAL FOR CALIFORNIA. The IEB is also seeking members’ advice on that possibility. THIS IS OPTION B on your ballot.” (Option B would result in the revocation of UHW’s charter.) This assertion is false and misleading. No one made a proposal to create one statewide healthcare union that is not UHW, and no one put forth a proposal that would result in the revocation of UHW’s charter. (Borsos Decl. ¶18(a).) x UHW Exhibit 240 states: “For several years, SEIU leaders and members throughout California have proposed and discussed many jurisdictional possibilities for long-term care and healthcare members. At the SEIU 2008 International Convention in San Juan, Puerto Rico, delegates from across North America debated a variety of resolutions on California. These Options A and B on your ballot present the two suggestions that best reflect all those proposals, discussions, and debates.” This assertion is also false and misleading. UHW never proposed either option A or option B. The SEIU Health Division and Local 6434 did not propose option B. UHW proposed that UHW should be the one healthcare union for California, which would mean that UHW’s charter would remain intact. There were no hearings regarding the revocation of UHW’s charter. There was no proposal that UHW’s charter should be revoked. (Id., ¶18(b).) x UHW Exhibit 240 states: “If the IEB adopts either of these two Options, after considering the members’ advice, will that action affect my Collective Bargaining Agreement? No.” This assertion is false and misleading. Some employers — including Stanford, Sutter Amador, and Children’s Hospital of San Diego — have refused to recognize a new union as the appropriate collective bargaining agent and thereby refused to honor previously negotiated CBAs. The International has failed to inform workers that there is a risk that their CBAs will not be honored, but rather affirmatively advised them that no such risk exists. (Id., ¶18(c).) Also, Local 6434 — under control of a trustee appointed by Andy Stern — began phone-banking UHW members as early as Sunday, November 16, 2008, encouraging them to vote for selecting one long-term care union — option A in the International’s ballot. (Local 6434 received prior

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notice of the vote; UHW did not.) The script used by Local 6434 is misleading in a number of ways. Not only is the vote skewed, but also this phone-banking further undermines the integrity of the voting process. (UHW Ex. 242.) The recently announced results of the International’s vote demonstrate its retaliatory nature and the International’s intent to gut UHW without regard to the wishes of its members. Less than 10% of those polled responded: About 306,000 ballots were sent, but only about 28,000 ballots were returned, according to the International. (See Ex. 244.) In contrast, more than 125,000 members of three different SEIU Locals signed petitions and cards protesting the forced merger. (See Ex. 245.) The overwhelming opposition among members of UHW and other Locals weighs heavily against both options presented on the International’s ballot. i. The International Conducted Opposition Research Against Sal Rosselli and UHW and Formed a “Skunk Team” as Part of Its Retaliation Campaign Against UHW

The International’s “bad faith” is also demonstrated by its formation of a “skunk team” and its “opposition research” on Sal Rosselli and UHW. (i) The International Used Local 1199 to Conduct Opposition Research on Sal Rosselli and UHW

As part of its retaliatory campaign against UHW, the International used Local 1199 in New York to conduct opposition research against UHW. Cal Winslow, a professor associated with the University of California, Berkeley, sent an email to the president of Local 1199. (Borsos 11/12 Tr. at 252:9-255:5; UHW Ex. 198.) The email refers to a meeting at which John Borsos described UHW’s dispute with the International. The email states: In the question time, a young woman stood up to explain that she had been hired by 1199 (in New York City) under the direction of Amy Gladstein to conduct opposition research on UHW concerning the dispute. Indeed she described this activity in some detail, including the existence of a team of researchers devoted to this project who were required to sign a confidentiality agreement, again under the direction of Amy Gladstein.

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(UHW Ex. 198.) Mr. Borsos heard the young woman and corroborated the events. (Borsos 11/12 Tr. 253:8-255:5.) Professor Winslow, of course, had no reason to fabricate the events in his email. The International presented Amy Gladstein in telephone testimony to deny that Local 1199 did this opposition research. That denial lacks credibility. Ms. Gladstein works for Local 1199 full time as a “consultant.” (Gladstein Tr. 1166.) Her law firm has done work for the International and receives about $400,000 to $500,000 per year from Local 1199. (Id., 11671168.) Even though she provided over-all direction to Local 1199’s Research Department since 2000, the first time Ms. Gladstein required its researchers to sign a non-disclosure agreement was in April 2008, the same time the opposition research was performed. (Gladstein Tr. 1170:14-25.) A U.S. District Court found Ms. Gladstein to lack judgment. In 1995, Ms. Gladstein was appointed as the election officer to supervise the election of the International Officers of the Teamsters. (Id., 1179:6-14.) In her work as the election officer, Ms. Gladstein appointed her husband, James Reif, to work on the election without informing the parties or the Court. (Id., 1179:15-1180:24.) This was brought to Judge Edelstein’s attention in a hearing. At the hearing, Ms. Gladstein admitted: “I regret the serious error in judgment I made in not informing your Honor with respect to the use of my spouse in any capacity with respect to my work as Election Officer.” (UHW Ex. 243, 6:24-7:2.) After hearing argument, the Court admonished Ms. Gladstein: [T]he Court finds that the Election Officer’s appointment of James Reif to act as legal counsel to the Election Office was egregious misconduct and deplorably flawed judgment. . . . [S]he completely failed to realize that she had an ethical obligation to avoid nepotism and the appearance of nepotism. (Id., 19:8-16 (emphasis added).)21 Judge Edelstein dismissed Ms. Gladstein from being the election officer. (Gladstein Tr. 1181:3-5.) Ms. Gladstein’s testimony lacked credibility in other respects. When asked whether her Research Department does opposition research, Ms. Gladstein answered, “We wouldn’t, no.
(Footnote continues on next page.)
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(ii)

Mr. DeBruin and His Special Project Operated as a Skunk Team to Discredit Sal Rosselli

As another demonstration of the International’s bad faith and retaliatory motive, Mr. DeBruin and members of his “project,” including Josie Mooney, operated as a “Skunk Team” to discredit Sal Rosselli. As described in Mr. Dewar’s declaration, Josie Mooney — a member of Mr. DeBruin’s team — recruited him to join “a skunk team that Andy [Stern] and I are putting together.” (Dewar Decl., ¶ 1.) The purpose was to counter UHW’s “Platform for Change” campaign and to undermine UHW. She said that Thomas DeBruin was her “silent partner.” She said that the International needed a communications effort on the ground in California. She said, “We have to trustee them.” In response to Mr. Dewar’s question as to whether the International is going to trustee UHW, Josie Mooney responded, “We have to.” In follow-up correspondence, Ms. Mooney said, “You have to give me your commitment. I am (as we speak) selling you at the highest levels. Don’t blow that :).” (Id., ¶ 6.) Mr. Dewar later met with Ms. Mooney, Mr. Mosher, Mr. Whitehurst, and Mr. DeBruin. They discussed ways to ruin Sal Rosselli’s credibility; Mr. Whitehurst discussed Sutter Health’s opposition research file on Mr. Rosselli, and they brainstormed about trying to “convert” senior UHW staff. Mr. Dewar described that meeting in detail. (Id., ¶¶ 9-14.) UHW Exhibit 55 is a contemporaneous email exchange that corroborates Mr. Dewar’s testimony. In this email, Mark Mosher states: “[Sutter Health’s opposition research file] really supports the idea that he’s not motivated by money. [Sal Rosselli’s] not paid by a half-dozen slush funds like the ones that have gotten NYC leaders in trouble.” In response, Mr. Dewar refers to his meeting with Josie Moony and Tom DeBruin. He suggests that the International appropriate UHW’s platform and that the International point out UHW’s “hypocrisy.”
(Footnote continued from previous page.)

We do research on corporate responsibility campaigns, on organizing targets, and on policy.” (Gladstein Tr. 1169:15-17) However, she then said that she didn’t know what the term “opposition research” meant, and had only heard that management consultants use it. (Id., 1169:18-24) Her testimony that the head of a local’s research department is unfamiliar with the term “opposition research” is not credible.

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Mr. Mosher responded to Mr. Dewar: “I agree on the hypocrisy angle. John Whitehurst read Sutter’s whole oppo file on Sal in 1997.” (UHW Ex. 55.) UHW Exhibit 55 demonstrates the Skunk Team at work. In fact, Mr. DeBruin’s Skunk Team put to use Mr. Dewar’s suggestion to attack UHW on “hypocrisy”. The International sent to UHW’s members a flyer that was prepared by people working with Mr. DeBruin and supervised by Stephen Lerner, with the headline: “UHW’s Hypocrisy on Democracy.” (UHW Ex. 232; DeBruin Tr. 1350:20-1352:9.) For his part, Mr. DeBruin admitted that Josie Mooney was part of his team. Mr. DeBruin admitted that, in the course of his “project,” he met with her in California at a restaurant; also at the meeting were Mark Mosher and John Whitehurst, who were already retained by the International. Mr. DeBruin admitted that Josie Mooney worked with Thomas Dewar and thought he was a “talented communicator.” (DeBruin Tr. 1341:25-1343:24.) Mr. DeBruin further admitted that Mr. Dewar was part of that meeting. Mr. DeBruin read the S.F. Bay Guardian article that describes the International’s Skunk Team. (UHW Ex. 78; DeBruin Tr. 1345:11-20.) Yet he never wrote to the Bay Guardian to request a factual correction or submitted a letter setting forth his disagreements with the article. (DeBruin Tr. 1345:11-1346:11.) Mr. DeBruin’s denial of the “Skunk Team” lacks credibility. Indeed, as detailed below, Mr. DeBruin’s testimony was replete with false statements and contradictions. j. The International’s Rejection of a Mediator’s Proposal Demonstrates the International’s Bad Faith

The International’s retaliatory motive and intentions are further demonstrated by its conduct pursuant to a mediation to resolve the issues between the parties. The International’s reaction shows that it is not interested in a resolution with UHW. Rather, it is intent on destroying UHW by one means or another. Although UHW and the International offered different testimony about the contents of the mediation, it is undisputed that UHW and the International held a mediation in April 2008.

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At the mediation, the mediator, Larry Fox, made a proposal. The proposal was never revoked by the mediator. It is still outstanding. UHW agreed to accept the proposal without reservations at the mediation. Even though the International disputes that UHW accepted the proposal, by UHW’s letter dated September 12, 2008, UHW wrote to Andy Stern and Anna Burger: “UHW continues to accept the mediator’s proposal to pursue a path of reconciliation with SEIU.” (UHW Ex. 156.) Without question, at that point UHW clearly agreed to accept the proposal. The International, however, never responded to UHW’s acceptance. The International clearly rejected the mediator’s proposal — either explicitly at the mediation as testified to by Sal Rosselli or implicitly by failing to respond to UHW’s reiteration of its acceptance. k. On May 1, 2008, Over 100 Labor Leaders and Academics Opposed the International’s Threatened Trusteeship, and the International Publicly Disclaimed Intention to Impose a Trusteeship

In response to the International’s threatened trusteeship in its March 24 letter and other communications, over 100 leading journalists, authors, political activists, and educators who are committed to organized labor opposed the International’s threatened trusteeship. (UHW Ex. 102.) The letter states: We are writing to express our deep concern about SEIU’s threatened trusteeship over its third largest local, United Healthcare Workers (UHW). We believe that there must always be room within organized labor for legitimate and principled dissent, if our movement is to survive and grow. Putting UHW under trusteeship would send a very troubling message and be viewed, by many, as a sign that internal democracy is not valued or tolerated within SEIU. In our view, this would have negative consequences for the workers directly affected, the SEIU itself, and the labor movement as a whole. We strongly urge you to avoid such a tragedy. (UHW Ex. 102.) UHW did not generate that letter. Professor Lichtenstein, a signatory to the letter, explained that UHW had nothing to do with the preparation of that letter. Rather, the letter grew out of a telephone meeting organized by the International, involving Stephen Lerner — a member of Mr. DeBruin’s Project — and Anna Burger and academics and labor leaders

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regarding the International’s dispute with UHW. The authors of the letter wrote the letter to encourage the International to resolve the matter in a more cooperative and simply political way. (Lichtenstein Tr. 475:12-14.) Professor Lichtenstein felt that, during the call, Stephen Lerner and Anna Burger were not “entirely forthcoming as to why a trusteeship might . . . continue existing between UHW and the International.” (Id., 472:7-473:24.) Mr. Lichtenstein’s impression was that the International should settle its dispute with UHW without imposing a trusteeship. “It’s a political fight.” The International and UHW were “having a political fight.” (Id., 473:19.) In response to the May 24 letter (UHW Ex. 102), the International publicly disclaimed any intention to impose a trusteeship. Andy Stern wrote a letter in May 2008 stating that, rather than taking formal punitive action for the Education Fund, the International filed a narrow lawsuit seeking return to UHW of funds spent from the Education Fund. (UHW Ex. 104.) Similarly, on May 5, 2008, about 48 appointed and elected leaders of SEIU wrote a letter stating that the only discussion about a possible trusteeship was coming from UHW — not from the International. As of May 2008, the International knew all the relevant facts about the Education Fund. (UHW Ex. 105.) And Stephen Lerner — a member of Mr. DeBruin’s project — wrote that it is a “myth that UHW has been threatened with trusteeship in the weeks leading up to our convention.” (UHW Ex. 171, at 9; Borsos 11/12 Tr. 170:3-10.) l. The International and Its Proxies Bombarded UHW’s Members with Anti-UHW Propaganda in Their Efforts to Implode UHW

As part of its retaliatory campaign against UHW, the International has bombarded UHW’s members with anti-UHW propaganda — in addition to communications regarding UHW’s vote on long-term care jurisdiction. Some of the flyers have come from the International directly. Others have come from Local 6434, which was in close coordination with the International and its proxies. (See UHW Ex. 219.)

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x

The International sent anti-UHW propaganda to UHW’s members and the press regarding the Education Fund, including numerous false and misleading statements.

x

The International sent flyers to UHW’s members referring to “UHW’s Hypocrisy on Democracy” and attacking UHW over a delegate election snafu, taking it far out of context. (UHW Ex. 232.)

x

The International’s proxies distributed a flyer stating: “Sal Rosselli is bitter about the fact that at the recent SEIU International convention, members and delegates across the country DID NOT RE-ELECT him as an International officer. So he’s spending his time and YOUR dues money on launching attacks on SEIU International and other California Locals.” (UHW Ex. 231.)

x

The International or its proxies distributed a flyer stating: “When 10 UHW-W Officials Diverted $3 million of members’ money to an outside fund, they may have broken more than just federal laws.” (UHW Ex. 100, at 3.) It further states: “But it appears that the 10 UHW-W officials are more interested in derailing efforts to unite long-term care workers into one statewide SEIU local than they are in protecting your money.” (Id.)

x

SEIU sent a flyer to UHW’s members stating: “UHW-W Leaders: Stop Wasting Members’ Dues Money. Focus should be on helping UHW-W members win strong contracts in 2008.” (UHW Ex. 100, at 5.)

x

The International or its proxy sent flyers to Good Samaritan Hospital workers and Kaiser workers, stating that UHW “violated multiple laws.” (UHW Ex. 83.)

x

The International or its proxies sent a flyer with a picture of a sun-bather that states: “While UHW-W president Sal Rosselli’s been working to secure his position as vice president of SEIU, his members have been denied their right to run as a Delegate and attend the SEIU Convention in Puerto Rico.” (UHW Ex. 114.)

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x

The International sent a flyer to UHW’s members attacking UHW’s leaders regarding the election of delegates and directing UHW’s members to www.seiufactchecker.org, the International’s anti-UHW propaganda website. (UHW Ex. 94.)

x

Local 6434 in collusion with the International sent email to UHW’s members. UHW Exhibit 51 is an example. Mr. Freeman told UHW’s members: “I wanted you to be aware that your local union president, Sal Rosselli, is secretly negotiating your next contract behind the backs of [UHW] members and the members of United Long Term Care Workers.” (UHW Ex. 51.) The email contains numerous false statements.

These flyers and emails were part of a coordinated campaign to attack UHW in retaliation for dissenting against the International. m. The International’s Internal Communications Demonstrate the International’s Retaliatory Motives and Plans to Destroy UHW by Any Means Necessary, Including by Imposing a Trusteeship (i) The Implosion Email Articulated the International’s Blueprint for Its Campaign to Destroy UHW

In early June 2008, Bill Ragen, a senior SEIU staff person and a member of Tom DeBruin’s anti-UHW project, memorialized in an email the International’s blueprint of its retaliatory campaign against UHW: the “Implosion” email. (UHW Ex. 115.)22 Mr. Ragen sent the email to Thomas DeBruin, an SEIU vice president and lender of the anti-UHW campaign, and Stephen Lerner, a member of the International Executive Board and special assistant to

This “implosion” email, the conduct of the November 2007 “war council,” and Mr. DeBruin’s project, all violated the SEIU Constitution. The SEIU Constitution, Article XVI, Section 1 provides: “No member of this International Union shall injure the interests of another member by undermining such member in connection with wages or financial status or by an other act, direct or indirect, which would wrongfully jeopardize a member’s office or standing.” (SEIU Const.) The Constitution also requires officers to pledge during their Officers’ Installation Obligation that they “will not knowingly wrong a member or see a member wronged if it is in my power to prevent it.” (Id., at 45.)

22

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Andy Stern. The International concedes that this is a true and correct email that was sent within the International, and Mr. DeBruin admitted receiving it. Although he claimed that the International does not have “any interest in imploding UHW” (DeBruin Tr. 1340:12-13), Mr. DeBruin participated in this email discussion about “imploding” UHW. Mr. DeBruin also admitted that Bill Ragen was not reprimanded for sending the email, that Mr. Ragen continues to work for Stephen Lerner, and that neither Mr. DeBruin nor anyone else questioned the propriety of Mr. Ragen’s blueprint for the destruction of UHW. (DeBruin Tr. 1341:1.) By their acquiescence, Mr. DeBruin and the other International officers implicitly ratified this plan for “implosion” of UHW. Without question, the “implosion” email proves that a trusteeship is simply another weapon by the International to retaliate against UHW. The email states: A few thoughts * Trusteeship would be difficult – it’s like Iraq, easy to get in and then a slog * will it take? Implosion would be a better outcome – but what

* Loss of LTC means half the local will be in the south, there are pockets of dissatisfaction * * a suicide mission. Local elections are early next year Some key senior staff may want to get out of

(UHW Ex. 115.) The “Implosion” in this email refers to methods to destroy UHW short of a trusteeship. It includes the transfer of long-term care members out of UHW. (Borsos 9/27 Tr. 143:24-144:8.) In fact, “[L]oss of LTC means half the local will be in the south” refers to UHW’s loss of its long term care ( “LTC”) members to Local 6434, the local in Southern California, i.e., “the south.” (UHW Ex. 115; Borsos 9/27 Tr. 146:6-14.) The next section of the “implosion” email is entitled “Issues that will need our attention after the convention.” (UHW Ex. 115.) Mr. Ragen lists two points under the subheading

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“Legal.” The first point says, “Education Fund (2 lawsuits).” (Id.) The International has indeed filed two lawsuits against UHW regarding the Education Fund. (Borsos 11/12 Tr. at 256:18-21; Siegel Tr. 794:22-795:10; 795:19-796:4.) The second point says, “DFR’s — Possible filing at Kaiser Sunset, elsewhere.” (Id., 257:13.) “DFR” is an acronym for “Denied Fair Representation” and is a legal action that a union member can file against a union for failure to appropriately represent. (Id., 256:25-257:6.) It is a tactic that anti-union employers encourage employees to do. (Borsos 11/12 Tr. 256:17257:11.) Yet, the International contemplated using DFRs against UHW. The next subheading is “Long Term Care jurisdiction.” (Id., 257:18-20.) The jurisdictional hearings to transfer UHW’s long-term care workers out of UHW were held in May and July 2008. (Id., 257:21-258:1.) The third subheading is “Internal,” and it lists two points. (Id., 258:2-3.) The first states, “complaints about UHW relationship with vendor ‘It’s in the Bag.’” (Id.) “It’s in the Bag” is a small marketing business operated by Sal Rosselli’s partner. (Id., 258:11-19.) UHW has never hired the firm because of its conflict of interest policy. (Id., 258:2-259:2.) Clearly, the International contemplated attempting to get dirt on Sal Rosselli’s partner. The second point is “Kaiser SF stewards — internal appeal and possible D.O.L. filing their dismissal by UHW.” (Id., 259:3-17.) There have been ongoing issues with Kaiser stewards. (Id., 259:12-13.) The International contemplated exploiting those issues against UHW. The fourth subheading states, “Members that have publicly spoken out, organized.” (Id., 259:19-21). One bullet point states “Independents: Good Samaritan, Cedars Sinai, Motion Picture.” (UHW Ex. 115.) In April 2008, UHW’s organizers leafleted Good Samaritan Hospital less than two weeks before a de-certification election. (Id., 260:11-20.) Another bullet point lists “Kaiser; Sunset, Woodland Hills, Panorama City.” (UHW Ex. 115.) UHW had issues at these facilities as well. (Id., 259:18-260:10.) The last bullet point says “Christy Brooks — Homecare Worker in Northern California (Blogger).” (Id., 260:24-25.) Christy Brooks ended

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up testifying on behalf of Local 6434 at the July jurisdictional hearings against UHW. (Id., 261:4-6.) Clearly, the International was identifying ways to organize UHW’s members against UHW and to damage UHW’s organization at specific facilities. The fifth subheading is “UHW Staff,” and it states, “Going to work for other locals (possible 2 in LA).” (Id., 261:11-12.) When Amado David resigned, there were about 10 UHW staff members who resigned at nearly the same time. (Id., 261:10-20.) The sixth subheading mentions member outreach about decisions at the Convention. (UHW Ex. 115) As John Borsos testified, after the SEIU Convention Tom DeBruin wrote an analysis of the Convention that discredited UHW leadership and discredited UHW’s movement for reform in the union. (Borsos 11/12 Tr. 261:21-262-11.) The seventh subheading regards open contracts at UHW’s nursing homes and hospitals. (Id., 262:12-13.) Mr. Borsos confirmed that in June 2008 UHW was in bargaining with dozens of nursing homes and hospitals. (Id., 262:12-263:4.) The email goes on to discuss other issues, including communicating with UHW’s members about UHW’s lack of attention to members’ concerns and continuing the debate between UHW and other locals so that the dispute is not portrayed as a power struggle between UHW and the International. (Id., 263:9-264:8.) Thus, in June of 2008, the International had the strategy to destroy UHW by “implosion” — not to pursue a trusteeship over the Education Fund. (ii) The International Conspired with and Supported Local 6434 in Sending Information Critical of UHW

Despite Mr. DeBruin’s testimony otherwise, the evidence clearly establishes that the International — including Mr. DeBruin — conspired with Tyrone Freeman to send information to UHW’s members that was critical of UHW. (See UHW Ex. 227.) UHW Exhibit 227 is an email chain circulated on May 23, 2008, that Mr. DeBruin admitted he participated in. In this chain, Tyrone Freeman sent Tom DeBruin an email that has as the subject line “latest mailing” and states “fyi. . . per conversation today.” (UHW Ex. 227.) Tom DeBruin forwarded that email

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to Andy Stern, Anna Burger, Stephen Lerner, and Andrew McDonald and added the following message: Finally talked with Tyrone. He does have a plan in place to continue several mailings and calls to UHW members, says they (UHW) are continuing to move their message attacking him, member petitions, and dividing LTC members, and he needs to be able to continue to move his message/respond. Attached is the latest mailing that Tyrone has in the mail (I’m trying to find out if this is just to UHW LTC or everyone). We should discuss. (UHW Ex. 227; DeBruin Tr. 1324:7-15, 1325:9-23.) In response, Stephen Lerner wrote to Thomas DeBruin: “I talked to Stern. He will talk to Tyrone.” (DeBruin Tr. 1327:4-7; UHW Ex. 227.) (iii) The International Held Meetings to Compile a List of UHW’s “Sins”

The International held meetings among its senior staff to compile a list of UHW’s “sins” to use against UHW in its retaliation campaign. UHW Exhibit 228 is an email chain among Stephen Lerner, Thomas DeBruin, Bill Ragen, and Denise Poloyac. The chain begins with an email dated May 14, 2008, from Stephen Lerner, asking Mr. DeBruin: “Did we agree on time to meet on Thursday to make list of UHW ‘sins’.” Stephen Lerner later wrote: Bill Ragen “is in town and is working on list.” (UHW Ex. 228.) The rest of the email discusses scheduling their meeting. Mr. DeBruin stated that the email chain talks about “a meeting that we were getting together,” and said that the group “had several meetings.” (DeBruin Tr. 1328:20-1329:3.) (iv) Andy Stern Personally Coordinated Handing Out AntiUHW Propaganda Through the Whips at the SEIU Convention

As Mr. DeBruin explained, a whip is “someone who is responsible for promoting a particular program or position of an organization.” (Id., 1329:7-11.) UHW Exhibit 229 is an email chain among Andy Stern, Anna Burger, Stephen Lerner, Thomas DeBruin, and Denise Poloyac, dated May 21, 2008. In this chain, Andy Stern wrote to Thomas DeBruin:

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Tom we need to talk about some material reayd [sic] to be handed out by whips at Convention [sic] on UHW constitution on selecting and other fact checker stuff. (UHW Ex. 229.) In response, Mr. DeBruin wrote: “Working on it.” (Id.) (v) The International Promoted a Decertification Campaign Against UHW at Good Samaritan Hospital and Attempted to Undermine at Least Four Other Election Campaigns

Mr. DeBruin agreed that a de-certification of the Good Samaritan Hospital would not only hurt UHW, but also the whole union. UHW Exhibit 230, however, is an email chain between Bill Ragen, Stephen Lerner, and Mary Kay Henry, entitled “daily letters” and dated April 25, 2008. (UHW Ex. 230.) In it, Bill Ragen wrote, “and what about offering Keisha Stewart to help on the Good Sam decert? UHW is in trouble there, and Keisha would make a difference.” Mary Kay Henry responded, “why do?” (Id.) The International negatively interjected itself into at least four other UHW campaigns immediately prior to union representation elections in 2008. In August 2008, the International sent an 11-page letter to workers at 1500 Stanford University Medical Center and the Lucile Packard Children’s Hospital filled with unproven allegations that are now the subject of federal litigation and this proceeding. The workers at both of these medical centers were not even UHW members. The International also sent letters or distributed leaflets critical of UHW leadership to members at St. Francis Medical Center, Tri-Cities Hospital in Oceanside, and Mercy Medical Foundation in Sacramento immediately prior to their votes regarding UHW representation. (UHW Ex. 147.) n. The International Resurrected Its Trusteeship Plan After the Corruption in Local 6434 Became Public

The International’s bad-faith motives are also demonstrated by the timing of the International’s notice of trusteeship hearings. In March 2008 the International raised concerns regarding the Education Fund — along with other meritless charges. In April, UHW provided the International with all the necessary information to assess the Education Fund. As International monitor Bob Hauptman testified:

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Q: A: Q:

And that list [UHW Ex. 167] represents all of the major expenditures from the PEF fund; isn’t that true? I believe so. Okay. And that was known by President Stern on April 21st of 2008 when he wrote this letter, that those expenditures had been made? I believe we had seen copies of checks for each of those expenditures. Okay. So you actually had the checks from the fund at that time in April, showing all of the expenditures from the fund? Showing the expense. Okay. And – but you weren’t appointed until – what? – three or four months later, August 12th of 2008, to do your investigation; is that right? In August, I was appointed to review the books and records of the union at the union. Yeah. And you didn’t discover any expenditures that weren’t known and listed in this letter of April 28? No. Because you already had the checks? Yes.

A: Q:

A: Q:

A: Q: A: Q: A:

(Hauptman 9/26 Tr. 95:16-96:14.) With all that information, in May of 2008, as noted above, the International publicly claimed that it was not pursuing a trusteeship and that a trusteeship was a “myth.” (UHW Ex. 171 at 9.) At the same time it was pursuing its jurisdictional hearings to gut UHW of its 65,000 long-term care members and place them in Local 6434. (See Borsos Tr. 256-257.) Then, on August 9, 2008, the Los Angeles Times published the first in a series of stories that exposed corruption at Local 6434, showing that Local 6434 inappropriately paid hundreds of thousands of dollars to firms, including a day-care center operated by Tyrone Freeman’s mother-in-law. (See

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UHW Ex. 129.)23 Shortly after the L.A. Times broke this story, its plan to transfer UHW longterm care members to Local 6434 in jeopardy, the International issued its notice of a trusteeship hearing in this matter. o. The International Appointed Members of Mr. DeBruin’s Project as Monitors of UHW

Around the same time that President Stern gave notice of this trusteeship hearing, he also appointed Thomas DeBruin and Stephen Lerner to be “monitors” to observe UHW. Borsos 9/27 Tr. 144:13-24; DeBruin Tr. 1347:5-1348:5.) As monitors, Mr. DeBruin and Mr. Lerner visited UHW and repeatedly demanded information from UHW. (DeBruin Tr. 1348.) As further demonstration of “bad faith,” the International appointed the founder and leader of the “project” — Mr. DeBruin — to wage a campaign against UHW; and another member of that project and a member of the “war council” tasked to discredit UHW — Stephen Lerner — to actually “monitor” UHW. Indeed, both Mr. DeBruin and Mr. Lerner were parties to the “implosion” email describing trusteeship as an alternative to “implosion”; both participated in meetings to compile “sins” of UHW; and both led the retaliation campaign against UHW. The International’s appointment of Mr. DeBruin and Mr. Lerner to be “monitors” of UHW furthered the International’s retaliation campaign. p. Tyrone Freeman and Matthew Maldonado Have Admitted the International’s Campaign to Retaliate Against UHW

The International’s retaliatory campaign against UHW was confirmed by Tyrone Freeman and Matthew Maldonado in a discussion with John Vellardita and Elizabeth Ortega. Mr. Freeman’s and Mr. Maldonado’s account to Mr. Vellardita matches and is corroborated by The International was well aware of this corruption. Andy Stern appointed Tyrone Freeman and was in close contact with him. (See UHW Ex. 227 (group email with Stern and Freeman); UHW Ex. 144 (“Freeman is a longtime Stern protégé.”) Moreover, Jim Philliou reported to others in the International in 2001 that he had concerns with Local 6434’s financial dealings with vendors, including possibly payments that Local 6434 was making regarding child care. (Philliou Tr. 1089-1092.) (See also UHW Ex. 134 (reporting that SEIU official Steve Trossman “was informed six years ago of allegations involving Freeman’s finances and personal relationships”).)
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other evidence introduced at the trusteeship hearing. Tyrone Freeman and Mr. Maldonado admitted the following: x “Sal was right. He told [me] a long time ago that they would use me and they did. I’m gone now; but, what they did to me, I don’t want to see it happen to you guys. I know first-hand because I’ve been part of the plans and the activities to take out Sal Rosselli and UHW.” (Vellardita Tr. 579:13-18.) In November 2007, Freeman and Maldonado had a meeting with Andy Stern, Anna Burger, Stephen Lerner, and others in Tampa, Florida. (Id., 580:3-581:7; 588:15-25.) Freeman referred to that meeting and other meetings as the “War Council.” (Id.) The War Council laid out a plan to discredit the leadership of UHW and convince the workers to join a long-term care union. (Id., 581:1-7.) This plan involved removing Mr. Rosselli from the California State Council, deciding the long-term care jurisdictional hearings, designing the 2008 Convention to marginalize UHW, paying Local 6434 to brand and carry out the attacks, and filing lawsuits against UHW. (Id., 581:1-589:6.) The International had put together a research team to conduct opposition research, a research team with a goal of digging up dirt on Mr. Rosselli. (Id., 581:8-584:15, 586:18-25.) Anna Burger personally engineered Sal Rosselli’s removal from the California State Council by rigging forgiveness of the delinquent per capita taxes by Freeman’s Local 6434 and Local 1877. (Id., 581:21-22.) The International wanted to remove Mr. Rosselli from the State Council in order to stop him from having any political influence and in order to give SEIU a direct pipeline to Governor Schwarzenegger and the legislature so that SEIU could move its agenda on healthcare reform. (Id., 581:23-582:21.) As of November 2007, the jurisdiction issue had already been decided such that all long-term care workers would be moved out of UHW. (Id., 582:22-583:11.) According to the plan, a report would be issued by SEIU’s Long Term Care Division (this ended up being the Hudson Report), and there would be a jurisdiction hearing for process reasons. At the upcoming Convention, they would move a resolution to create a single long-term care local. (Id., 583:12-18.) The 2008 Convention was designed to isolate and marginalize UHW. (Id., 583:21-584:15.) This included how certain motions were placed on the floor, how resolutions were moved, and who would speak. (Id., 583:24:584:2.) UHW was specifically seated between opposing delegations. (Id., 584:3-5.) There were daily meetings and debriefings before the Convention. (Id.) The International allowed Mr. Freeman’s union’s delegates to be seated at the SEIU convention, as a result of Mr. Freeman’s assistance in the campaign against Mr. Rosselli despite his union being 3-4 months in arrears in payments to the International, (Id., 584:21-585:13.)

x

x

x

x

x

x

x

x

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x

Local 6434’s campaign, consisting of mailings, phone calls, staff time, visits into nursing homes and people’s homes cost millions of dollars. (Id., 585:17-586:17). The campaign was called “Stronger As One,” and was branded by Local 6434 and approved by the International. (Id., 587:3-7.) To finance the campaign, which was to be run by Local 6434, Mr. Stern told Mr. Freeman that the International would forgive Local 6434’s obligation to pay 20% for organizing. (Id., 581:11-17). Mr. Stern personally promised Mr. Freeman his union would be “taken care of,” in light of the millions of dollars it was costing to run the campaign against UHW. (Id., 586:12-15.) Individual UHW members who filed suit regarding the Education Fund were directly aided by Burger and the International’s attorneys, with the intent of putting a face on the dissent within UHW. (Id., 587:20-588:5). These members would be provided legal assistance by the International’s counsel. (Id., 588:6-10). q. Thomas DeBruin Made Numerous False Statements of Fact and Lacks Credibility

x

x

Thomas DeBruin made numerous false statements during his testimony. Indeed, many times Mr. DeBruin said one thing, only to turn around and say the opposite moments later. Mr. DeBruin’s testimony was often impeached by documents that he had received or authored. Mr. DeBruin lacks credibility and reliability as demonstrated by the following chart: DEBRUIN’S TESTIMONY Implosion Email Mr. DeBruin testified: Q: Do you want to harm UHW? A: Not at all, quite the opposite. Q: You don’t want to destroy UHW; do you? A: Not at all. (DeBruin Tr. 1246:24-1247:2.) Mr. DeBruin later testified about the Implosion Email he received from Bill Regan (UHW Ex. 115): Q: Did you ever go to [Bill Regan] and say, what are you talking about? A: No. Q: Did you ever say, implosion? That’s ridiculous? A: No. ... Q: You had meetings with Stephen Lerner and others about some of the items in this e-mail; correct? A: After this email? Q: Yes? A: As a result of this e-mail? No. ... Q: Did anyone go to you and say, Thomas DeBruin – Tom, I mean, I can’t believe we’re THE CONTRADICTION

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THE CONTRADICTION talking about this. I can’t believe we’re talking about imploding one of our locals. Did anyone say that to you? A: No. (DeBruin Tr. 1340:1-2, 1341:2-24; UHW Ex. 115.)

Long-Term Care Jurisdiction Vote Mr. DeBruin testified that members should be able to vote for their leaders and that he cares what UHW Executive Board members have to say about long term care jurisdiction: Q: You don’t want to take away the right of UHW’s members to vote for their leaders; do you? A: Not at all. Q: You think it’s important for UHW’s members to vote for their leaders? You agree with that; right? A: Yes. (DeBruin Tr. 1247:1-13.) Q: Did you ever have a discussion with UHW Executive Board members about jurisdictional changes in longterm care workers? A: No. Q: Have you ever had discussions with UHW Executive Board members with longterm care workers in California? A: No. Q: Do you care what they say? A: Absolutely (Id., 1290:6-15.) However, Mr. DeBruin also admitted that he approved a vote that did not offer UHW members the option to stay in UHW as it is, and that under either option, Andy Stern would appoint the leadership: Q: The Executive Board didn’t even give UHW members an option to check a box to say, I’m happy with the way things are. I like my union and I want to keep it. Isn’t that correct? A: That’s not one of the options here, no. Q: [U]nder either Option 1 or 2, President Andy Stern would have the right to appoint the leader of the Union, correct? A: Yes. (DeBruin Tr. 1302:5-14.) Q: Did you vote to approve that vote? A: Yes. Q: So, you know what it says – or at least, at one time, you knew what it said? A: At one time, I thought I knew what it said, yes. (Id., 1294-19-24; UHW Ex. 125.)

Disagreement With Sal Rosselli Mr. DeBruin testified about the growing strain International Exhibit 126 is a memo that Mr. DeBruin in his relationship with Sal Rosselli in 2007 but wrote on October 9, 2007. He wrote: denied that the strain was over UHW’s I think the thing that captures where we program and policies. He testified: disagree most significantly, and I believe that Q: So your personal relationship with Sal it leads to what have become most of our Rosselli had been strained? disagreements over the last couple of years, is in the actual program that you lay out in your

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DEBRUIN’S TESTIMONY THE CONTRADICTION A: Yes. annual report, as well as, several of the other important documents used with members:” Q: And it was getting more strained; is that Mr. DeBruin then testified: right? Q: [S]o, the basis of your disagreement with Mr. A: Yes. Rosselli was the programs that UHW was Q: And it was getting strained because of putting forth; isn’t that correct? the position Sal Rosselli was taking on various issues? A: I believe so; at this time, when I wrote this report, yes. A: No. (DeBruin Tr. 1274:19-1275:5.) Mr. DeBruin said Q: You agree that the – that some of the bases for his disagreement with A: No, I would say, absolutely, no — Rosselli was in UHW’s positions, as articulated in its (DeBruin Tr. 1272:18-1273:5.) “Six Ingredients For Success.” (Id., 1275:7-1276:1.) DeBruin’s Position on Andy Stern’s Direction of the International Mr. DeBruin testified: Mr. DeBruin, however, also testified: Q: You’re in complete agreement with A: I absolutely support the program and direction Andy Stern’s directive of the way SEIU of the Union under Andy Stern should move; correct? (DeBruin Tr. 1288:3-4.) A: No, that would not be correct. (DeBruin Tr. 1288:5-7.) The International’s Anti-UHW Campaign Team Mr. DeBruin testified: Q: You were in charge of the campaign against UHW correct? A: Absolutely not. (DeBruin Tr. 1333:13-18.) However, Mr. DeBruin explained that he was the “Campaign Program Manager” of the project to counter UHW (DeBruin Tr. 1224:7-1226:6), and testified that Bill Ragen, Stephen Lerner, Josie Mooney, [Flannery Hauck], Tyrone Freeman, and Amado David were also part of that team. (Id., 1334:21-1335:10; 1336:2-18.)

Coordinating Anti-UHW Information Project with Tyrone Freeman Mr. DeBruin testified: Q: And you talked to [Tyrone Freeman] about sending out information against UHW? A: No Q: And you talked to him about sending out fliers that were critical of UHW? A: I have no – no, that would not be true. Q: You talked to him about the process about sending out information that UHW Exhibit 227 is an email chain between Tyrone Freeman, Mr. DeBruin and others at the International. The subject line is “Re: latest mailing.” (UHW Ex. 227.) It shows that Tyrone Freeman wrote to Mr. DeBruin on May 23, 2008, and Mr. DeBruin then forwarded the message to Andy Stern, Anna Burger, and Stephen Lerner with the following message: Finally talked with Tyrone” about “a plan in place to continue several mailings and calls to UHW members, says they (UHW)

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DEBRUIN’S TESTIMONY might be viewed as critical to UHW? A: No, I don’t think so (DeBruin Tr. 1322:5-1323:3.) Q: Did you have any discussions with Tyrone Freeman about sending out materials critical to UHW? A: About sending out — no, I don’t believe so. (Id., 1347:2-4.)

THE CONTRADICTION are continuing to move their message attacking him, member petitions, and dividing LTC members, and he needs to be able to continue to move his message/respond. Attached is the latest mailing that Tyrone has in the mail (I’m trying to find out if this is just to UHW LTC or everyone). (Id. (emphasis added).) Mr. DeBruin admitted: “I don’t have any reason to believe I didn’t write this Email,” (DeBruin Tr. 1326:10-11) and stated, “I believe that I forwarded this e-mail – sent this e-mail – to Andy Stern, yes.” (Id., 1326:13-23.) In response, Stephen Lerner wrote back: “I talked to stern. He will talk to tyrone.” (Id., 1327:4-7.)

Coordinating Dissemination of Anti-UHW Information at Convention with Andy Stern Mr. DeBruin denied that Andy Stern coordinated the dissemination of materials critical of UHW at the convention: Q: Did Andy Stern coordinate with you — yes or no — the process of handing out materials critical of UHW through the whips at the convention? A: Did he coordinate with me? No. I had an assignment and I carried out my assignment that I was to do. (DeBruin Tr. 1330:5-10.) UHW Exhibit 229, however, is an e-mail that Andy Stern sent to Mr. DeBruin. Andy Stern wrote: Tom, we need to talk about some materials ready to be handed out by whips at convention on UHW Constitution on selecting and other factchecker stuff. Mr. DeBruin responded: “Working on it.” DeBruin said that Stern sent him this email on May 21, 2008 and that he responded, and that he had been in discussions about creating UHW-critical material that would be communicated to members and delegates at the convention. (DeBruin Tr. 1331:231333:12.) DeBruin testified that he coordinated whips at the convention to hand out materials critical of UHW: Q: You coordinated SEIU whips at the convention to hand out materials about UHW-A: Critical of their positions that we disagreed with – that I disagreed with – that were in opposition to the program that was democratically adopted and decided by the rest of the Union. Q: Yeah. And you coordinated handing out materials that were based on “factchecker.com” that SEIU set up; isn’t that correct? A: Probably, yes.

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THE CONTRADICTION (Id., 1330:11-22; UHW Ex. 229.) The IEB Gag Order

Mr. DeBruin testified: Q: [T]here’s been some testimony, I think about a gag order that was imposed on the Executive Committee. ... Q: And there was no gag order or — A: I would never characterize any of what we did there as a gag order, at all. I mean, in fact, I think it’s the opposite. (DeBruin Tr. 1210:25-1211:2, 1212:15-17.)

However, Mr. DeBruin admitted that the Code of Conduct of the Executive Committee stated: We need to respect differing values in the room and differing opinions, but need to honor final decisions and agree to not go public with disagreements. (DeBruin Tr. 1214:20:22; Int’l Ex. 125 (emphasis added).) He testified that: It was a growing concern of leaders on the Executive Committee and on the Executive Board about whether or not it was – you know, we could have recognized discussions within, you know, within those bodies and not be afraid that what we were talking about would be leaked to the press, or would be – or that we would be attacked outside of, you know, that body for, you know, for our opinions or for our discussion. (Id., 1211:19-1212:1.)

The Mediation Proposal Mr. DeBruin testified: Q: Do you recall at the mediation you were there for two days? ... A: Yes Q: At some point, did Mr. Larry Fox [the mediator] make a recommendation to both parties? A: Yes ... Q: He made a proposal; right? A: Yes? Q: And UHW accepted the proposal; right? A: Absolutely not. Q: And SEIU rejected the proposal; right? However, Mr. Rosselli had sent a letter to Andy Stern and Anna Burger on September 12, 2008 stating that: UHW continues to accept the mediator’s proposal to pursue a path of reconciliation with SEIU. (UHW Ex. 156.) Mr. DeBruin testified that he had seen the letter before and that it was sent to him, and that it seems logical that the sentence means that UHW is willing to accept the mediator’s proposal. (DeBruin Tr. 1318:2-1319:11.) Mr. DeBruin also admitted: Q: SEIU accepted the proposal? A: We never got to the point of actually – but the proposal was not acceptable as it was put forward by the Healthcare Division leaders because there was a part of it that we had no

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DEBRUIN’S TESTIMONY A: No. (DeBruin Tr. 1310:9-25.) When asked again, DeBruin said that UHW “didn’t accept the proposal. They raised issues. I assume they were not in agreement with the proposal, so--.” (Id., 1317:7-11.)

THE CONTRADICTION authority to be able to agree to. (Id., 1311:1-6.)

Discussing UHW Mediation With Others Mr. DeBruin said that mediation discussions were supposed to be confidential. A: Well, one of the ground rules going into the mediation or facilitating discussion, and throughout, and at the end of the discussion, was an agreement that it would be confidential; and also that it would not be used as a weapon by anyone. (DeBruin Tr. 1227:22-1228:6.) However, SEIU Healthcare, of which Mr. DeBruin is a member, gave reports on the mediation discussions to local and international staff, as well as others including Amy Goldstein, who is not even union staff. Goldstein testified: Q: [I]f you could just tell me the totality of the discussion that you had about UHW at that meeting with the SEIU? A: It was not a discussion. I was in attendance at meeting where there were reports given concerning the status of mediation efforts with UHW. It was not as if I was having a personal discussion with anybody. That was what I said before. (Goldstein Tr. 1177:4-12.) Q: So, what kind of staff position do you hold with 1199? A: I said I was retained by them. I’m an attorney, so, I don’t hold a staff position. I thought I explained. I had a functional responsibility to direct the Organizing Department. (Id., 1166:10-15.)

The Growth of DeBruin’s Local Mr. DeBruin testified: Q: And 1199-P increased by about 6,400 members as a result of those jurisdictional decisions; is that fair? A: No, not at all. I don’t believe that’s true, no. Q: You’re absolutely certain that’s not true? A: I don’t believe that’s true, no. (DeBruin Tr. 1286:18-23.) UHW Exhibit 234 is a copy of Service Employees International Union 2006 Mid-Year Per Capita Membership Report for the period ending June 30, 2006. Page 34 of that report shows that in 2002, 1199-P had 11,162 members. In 2006, it had increased its membership to 17,855, of which 6,400 were transferred from locals that had merged into 1199-P. The chart shows that 1199-P grew between 2000 and 2006 at a rate of just 1.7%. (UHW Ex. 234, at 34.)

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THE CONTRADICTION Affiliation Agreements

Mr. DeBruin testified: A: []and in fact, the policy of the Union has been to move away from Affiliation Agreements, and especially, to move away from the idea, you know, of putting all kinds of special protections, or provisions, in the Affiliation Agreements, or to try to build into them the, you know, that they actually phase out over a period of time. * * * Q: Are you aware of any situation where a Local Union that was original to the SEIU was able to negotiate or obtain a special affiliation agreement that takes it outside the general Constitutional provisions? A: I’m not aware of any; and, you know, I’m not sure why that would make any sense at all. (DeBruin Tr. 1231:4-1232:6, 1232:17-22.) VI.

However, Local 1199 NE and Local 1199P (Mr. DeBruin’s union) have affiliation agreements that contain exemptions from the International Constitution. (Borsos Decl. ¶9; UHW Ex. 235.) Moreover, on May 20, 2008, President Stern wrote to the President of 1199NE that: I commit to 1199NE, on behalf of SEIU and all of its constituent bodies, that 1199NE’s support for, and participation in some or all of the Justice for All changes does not, and will not amend in any way any provision in the 1199NE/SEIU Affiliation Agreement. (Borsos Decl. ¶10; UHW Ex. 236.)

TRUSTEESHIP WOULD NOT BE IN THE BEST INTERESTS OF UHW MEMBERS OR SEIU A trusteeship can be imposed only when “in order to protect the interests of the

membership, it is necessary to appoint a Trustee for the purpose of correcting corruption or financial malpractice . . . .” (SEIU Const. Art. VIII, § 7(a).) The International has failed to show that a trusteeship is necessary for protecting the interests of the membership and to correct corruption or financial malpractice. On the contrary, the evidence demonstrates overwhelmingly that a trusteeship is not necessary to protect the interests of the membership and would affirmatively harm UHW’s members. Putting UHW in trusteeship would also do great harm to the reputation and integrity of SEIU and the labor movement generally.

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A.

A Trusteeship Will Disenfranchise UHW’s Members, Who Will Have an Opportunity to Elect UHW’s Leaders in February 2009 — with a Full Record of These Proceedings

A trusteeship is not necessary to protect the interests of UHW’s members, for the simple reason that UHW’s members will soon have an opportunity to voice their own preferences for UHW’s leaders, with full knowledge of the claims raised by the International in these proceedings. UHW officer elections, which take place every three years, will be conducted in February 2009. Imposing trusteeship would deny UHW members their democratic right to choose their leaders: As Mr. Rosselli testified, [T]his fight is not about me, it’s not about any of us as individuals, it’s not about our entire Executive Board. It’s about this workers’ movement, changing the lives for themselves, and the patients they care for; and, [in] just a couple months from now, 150,000 members of this union are going to have a once-every-three year opportunity to elect their local leaders. They should be given that opportunity to determine who they want to lead this union. (Rosselli Tr. 979:17-25.) The entire record of these proceedings, including all the evidence the International has produced regarding the Education Fund, is available for UHW’s members to review and to assess. Thousands of UHW members attended the trusteeship hearings in person, and the entire transcript of the proceedings is available on the SEIU voice website. Therefore, UHW’s members can make their decisions about whether to retain existing officers or elect new officers, with full access to the record in this trusteeship hearing. Indeed, the International agrees that UHW’s members should not be disenfranchised and that taking away their right to vote for their leaders would be unfair. Mr. DeBruin testified as follows: Q: A: Q: A: You don’t want to take away the right of UHW’s members to vote for their leaders; do you? Not at all. You think it’s important for UHW’s members to vote for their leaders? You agree with that; right? Yes

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Q: A:

You agree it would be unfair to take away the members’ rights to vote for their leaders? You agree with that right? Yes.

(DeBruin Tr. 1247:3-13.) Yet, if a trusteeship is imposed, that is exactly what will happen. President Stern will appoint a trustee to control UHW, and UHW’s members will lose their right to vote for their leaders — a result that the International admits is unfair. B. UHW Has Been an Extraordinarily Successful Local Under Its Current Leadership

UHW has about 150,000 workers across California and is the second-largest local in SEIU.24 (Borsos 9/27 Tr. 61:13-15, 61:24-62:1.) It has approximately 200 collective bargaining agreements. They range from the Kaiser contract — which covers about 45,000 members and 45 or 50 different work sites, and is the second-largest private sector contract in the country — to smaller contracts covering just a few members. (Id., 65:21-66:12.) UHW has the reputation in the labor movement of being a militant, democratic, and progressive union; for winning the best standards — wages, benefits and working conditions — in the United States for healthcare workers; and for fighting very hard for contract standards at the bargaining table. (Id., 66:2267:13.) Since the mid-1990s, UHW has developed an increasingly larger coordinated contract campaign strategy. (Id., 71:18-22.) UHW lined up contracts with different employers to expire at the same time — in 2000, 2004, and 2008. (Id., 71:23-72:9.) By 2008, UHW was able to bargain for 75,000 workers at close to 200 different facilities, covering about 75 different contracts. (Id., 72:10-72:13.) This allowed UHW to bargain with the industry as an industry. (Id., 72:14-17.) UHW’s strategy was to negotiate the best contract, set a pattern, and hold other employers to that pattern. (Id., 72:22-23.) If employers do not agree to the pattern, UHW engages in significant strike activity. 2008 has been a particularly important year for this

Mr. Borsos has a Ph.D. in American Labor History and is an elected UHW Administrative Vice President. (Borsos 9/27 Tr. 56-57.)

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strategy. (Id., 73:12-15.) UHW worked towards 2008 for over 15 years. (Id., 73:16-17.) UHW saw 2008 as a way to drive long-term care standards in the same way it drove acute care standards. (Id., 73:20-74:1.) Over the last 20 years, UHW has developed a set of standards to which it tries to hold all employers. (Id., 68:1-21.) They include: wage scales for employees; fully employer-paid health insurance for employees, spouses, and dependents; defined benefit pension plans; retiree health plans; employee voice in staffing; arbitration and strike rights; successorship rights (so if a company is sold, the contract will continue with the new owner); bans on subcontracting employment; and income security. (Id.) Even Mr. DeBruin admitted that UHW has some of the best contract standards in the United States. He testified: Q: A: You agree that UHW has won some of the best contract standards for its members in the entire county? I think they have very good contract standards. I believe that’s true, yes.

(DeBruin Tr. 1245:13-16.) UHW’s contract with Kaiser is the gold standard in the industry. It prohibits layoffs during the contract term, which is unprecedented in healthcare. (Borsos 9/27 Tr. 68:22-69:7.) Local 250 was the first healthcare union in the country to win a defined benefit pension plan. (Id., 69:8-9.) Local 250 and Local 399 were the first healthcare unions in the country to win fully employer-paid health insurance. (Id., 69:9-11.) In 2000, Local 250 obtained a full voice in staffing that allows UHW to jointly determine staffing levels in hospitals, a first in the country. (Id., 69:12-15.) Since the mid-1990s, Local 250/Local 399/UHW won the ability to organize unorganized workers in hospital systems and more recently in nursing homes without employer interference, so workers have a right to join a union without employer interference. (Id., 69:1621.) UHW has had a dramatic effect on the lives of its members. For example, six or seven years ago, Catholic Healthcare West (“CHW”) was virtually non-union. (Id., 70:17-22.) There was no wage scale, no defined benefit pension plan, and no voice in staffing. (Id., 70:23-71:3.)

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In the space of about 12 months, UHW organized 28 CHW hospitals and won in the first contract: fully employer-paid health insurance; wage scales; defined benefit pension plan; the right to arbitrate over staffing; a ban on subcontracting; and other standards. (Id., 71:8-17.) In 2008, while the International and Local 6434 promoted template agreements for employers with the Nursing Home Alliance, UHW won full-blown CBAs with nursing home employers who were formerly part of the Nursing Home Alliance, establishing many firsts — including wage scales, the right to strike, successorship rights, and pension plans. (Vellardita Tr. 564:6-566:18.) UHW’s nursing home workers had been working for 15 years – some of them working without a contract for 18 months, and some of them sacrificing strike rights – in order to achieve a common expiration date. (Borsos 9/27 Tr. 74:2-13.) As Mr. Rosselli testified, “not only is trusteeship not necessary to protect the interest of these workers, but, trusteeship will interrupt the progress that these healthcare workers have been making over the last 20 years, to this point of the greatest potential.” (Rosselli Tr. 978:11-15.) Mr. Rosselli said that “one of the most awful things in this conflict is that a lot of our members [now] hate SEIU, and you’ve heard the resentment from homecare workers who are being forced out of this Union into a Union that’s replete with problems.” (Id., 979:1-5.) Member Anne Willard reflected the sentiment of many of her union brothers and sisters with her message to the hearing at the end of the second day, that “Andy Stern . . . is just creating negativity out in the world there toward unions by going this kind of a process, covering up his own corruption, by going after us, when clearly, nothing has really been wrong. So please, take that message back for me.” (Willard 9/27 Tr. 281:12-18.) Despite this, Mr. Rosselli “believe[s] that the super majority of [UHW] leaders love this Union and want to work constructively with other elected leaders in this Union . . . to continue to do — we’ve done so successfully in recent years.” (Id., 979:9-13.)

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C.

If a Trusteeship Is Imposed, the International Will Likely Harm UHW’s Members Because Many Contracts Are Open and the International Has a Track Record of Making Sweetheart Deals

If the International imposes a trusteeship, the International will likely harm UHW’s members. If a trusteeship is imposed, contract standards for UHW’s members will likely be reduced. The International has a track record of making deals with employers that hurt workers. Employers clearly would rather bargain with the International because they believe they will get better terms with the International than with UHW. First, the threatened trusteeship has already damaged UHW’s contract negotiations with employers. UHW is currently in negotiations with multiple employers. (Borsos 9/27 Tr. 86:917.) At one point, the International sent monitors to attend UHW’s contract negotiations with CHW, at which time, CHW began asking about the role of the trusteeship. (Id., 86:21-87:1.) In some cases, for example, with Sutter Health and the Daughters of Charity, the trusteeship came up across the bargaining table. (Id., 87:1-3.) Employers started to put “take-aways” on the bargaining table, attempting to take away terms favorable to employees. (Id., 87:6-88:5.) For example, one employer has attempted to impose merit pay, which UHW has long ago removed from its contracts. (Id., 87:6-24.) Another hospital employer proposed that employees would have to pay for health insurance, something that has never been a part of UHW contracts. (Id., 88:6-19.) Another employer tried to ask for the right to subcontract out work — which would lead to the termination of UHW’s members. (Id., 88:24-89:2.) An employer also asked to eliminate the code of conduct that governs the process when unorganized workers want to organize a union. (Id., 89:3-7.) Some employers are trying to roll employee rights back to the 1960s. (Id., 88:20-23.) Although UHW had been bargaining with employers since February, these “take-aways” suddenly appeared after the trusteeship notice was issued. (Id., 90:2-7.) Some management representatives told UHW’s bargaining team that they were counseled to wait until the trusteeship is imposed because they can get a better deal with SEIU. (Id., 90:2-15.) Second, the International has a track record of entering into sweetheart deals with employers. With Tenet Healthcare, the International agreed to allow Tenet to subcontract out

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12% of the total number of employees in the bargaining unit — about 840 members. (Id., 91:1392:22; Lewis Tr. 756:2-12; Lewis Decl. ¶ 8; Philliou Tr. 1075:10-23.) That means that the International tried to give away to Tenet the right to fire about 840 UHW members. (Borsos 9/27 Tr. 93:7-18.) The International also agreed with Tenet to give away the right to strike for ten years and would have agreed to wages that did not guarantee wage scales. (Lewis Tr. 748:14-749:15; 758:11-759:20.) In bargaining with the Nursing Home Alliance, the International tried to continue the template agreements, which had no right to strike, no wage scales, no successorship rights, no right to arbitrate general grievances. (Vellardita Tr. 542:15-16; DeBruin Tr. 1256:8-23.) Local 6434 — under control of the International’s appointed trustee — agreed to continue the template agreements. (Vellardita Tr. 565:19-566:7.) UHW, on the other hand, successfully negotiated full collective bargaining agreements with nursing home and hospital employers, with the right to strike, wage scales, and grievance procedures, among other benefits. (Id., 562:10-563:20, 564:6-545:11.) There are a number of nursing home employers with whom UHW has not yet settled a contract. (Id., 565:12-18.) If a trusteeship is imposed, the International will surely sell them out for more template agreements and concessionary contracts. Third, contracts that the International negotiated in California are much worse for workers than UHW’s contracts. For example, at Mercy Medical Center in Redding, under UHW’s contract, the starting rate for a housekeeper is about $15 per hour, with fully employerpaid family health insurance, a defined benefit pension plan, retiree health, a ban on subcontracting, staffing rights, and successorship rights. (Borsos 9/27 Tr. 94:15-95:6.) Two miles away at Shasta Regional Medical Center, where workers are under a Service Workers United (SEIU affiliate) contract, wage rates are less than $9 per hour; they have no fully employer-paid benefits; the employer can subcontract; there is a full-blown management’s right clause; and they lack retiree health insurance. (Id., 95:7-19.) If a trusteeship is imposed, there is evident reason for concern that UHW’s members will have similarly inferior standards.

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D.

Professor Lichtenstein Showed that a Trusteeship Would Not Work Here, Would Be Inconsistent with the Historical Purposes of Imposing a Trusteeship, and Would Be Contrary to the Interests of SEIU as Well as UHW

Professor Lichtenstein’s testimony shows that a trusteeship is not necessary to protect the members of UHW or SEIU. Professor Lichtenstein is an expert on labor history who has taught the subject for about 30 years at the graduate and undergraduate levels; he has single-authored books on labor history, and published numerous articles on labor history. (Lichtenstein Tr. 456:14-460:4.) He is the founder and director of the research and educational unit at U.C. Santa Barbara — Center for the Study of Work Labor Democracy. (Id., 458:21-459:12.) He explained the historical circumstances where trusteeships do not work: Generally, when there is — when they’re imposed for political purposes on a Local which, itself, is a well-organized, well-run democratic — has a voice — is, at least, of a certain modest to large size, and one in which it — essentially, it’s simply designed to eliminate the existing leadership and impose another one. And I think those are circumstances in which, historically, trusteeships have not worked. (Id., 460:14-21.) He gave two historical examples where there were major political differences between the International and the local and the local had broad support among its members, and the trusteeship imposed was a failure — the United Auto Workers Local 600 and the Minnesota P-9 United Food and Commercial Workers cases. (Id., 460:12-464:8.) In fact, the international in the P-9 case destroyed the local. (Id., 463:22-464:8.) The exact same circumstances pertain here — UHW has broad support among its members, and UHW and the International are in a political fight over bargaining strategy and the direction of the labor movement. Professor Lichtenstein read the transcripts of the first two days of the hearing — where the International put on its case regarding the Education Fund. (Id., 468:15-22.) He testified that imposing a trusteeship here would be inconsistent with the historical paradigms of trusteeships. (Id., 469:21-470:12.) He explained: And the reason is that, in this instance, from what I know as — again, as just an observer of this Local — but, I think it’s a big Local and, you know, it’s in the news. It strikes me as a Local in which there is no self-serving, self-interested strata of leaders who

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seek to perpetuate their leadership for criminal or self-aggrandizing purposes. Instead, it’s a democratic, open union — in some ways a model union. I wish there were more like United Healthcare West. (Id., 470:3-12.) A trusteeship here would be parallel to the UAW Local 600 and Minnesota P-9 cases — and would similarly end in disaster. Mr. Lichtenstein explained that he had attended the UHW Leadership Conference in San Jose in 2008. “I was very impressed. I mean, I was very impressed with the 2,500 delegates, multi-cultural, many different languages. . . . I [was] impressed — and it reminded me — it reminded me of the UAW at its most dynamic and militant and [democratic].” (Lichtenstein Tr. 470:7-22.) E. Dolores Huerta Vouched for the Quality and Integrity of UHW and Its Leaders

Dolores Huerta is a legend in the labor movement — extremely well respected and the recipient of numerous awards, including the Houston Justice Award from Harvard Law School, which she was awarded along with Sandra Day O’Connor and Arch bishop Desmond Tutu. Her work with UHW and Local 250 ranges back decades. She testified: [S]ince I’ve known the people in UHW, many of the staff have been on various campaigns, I’ve always known them to be people with a lot of integrity, a lot of commitment, very, very hard workers in terms of the organizing that they do in reaching out to their members, and a lot of involvement from the membership. And my impression has always been it’s a very democratic organization, a very open organization, that has a lot of commitment to organizing, and making a better benefit and wages for the workers. (Huerta Tr. 269:11-20.) She has known Sal Rosselli for years. She testified that Sal Rosselli is a very hard worker very committed to the organization, and a very “honest person and a person with a lot of integrity.” (Id., 270:9-10.) She also testified that UHW “is a real model for other unions in terms of the work that they do and the way that they represent their workers.” (Id., 271:6-10.)25
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The International attempted to suppress Ms. Huerta’s testimony. Ms. Huerta testified that, on the day of her testimony, Clem Dean, International Vice President, called her and asked her not to testify at the hearing. (Huerta Tr. 273:3-19.) The International succeeded in suppressing others. Mr. Kumar testified that Beth Capell, a contract lobbyist with the California
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F.

Over Seventy UHW Members Testified in Support of UHW’s Leadership and Spoke Out Against the Attempt by President Stern to Put UHW in Trusteeship

At the end of Saturday, September 27, 2008, for more than two hours, over 70 members of UHW spoke about the charges SEIU has leveled against UHW.26 There was universal support for UHW and its leadership against the threatened trusteeship. UHW’s members condemned the International’s attempt to impose a trusteeship and Andy Stern’s attempt to take their union away from them. UHW’s members echoed the concerns articulated above, including a preference to elect their own leaders rather than have a trusteeship imposed, fear of harm if the International imposes a trusteeship, and confidence in UHW’s current leadership. Over seventy UHW members indicated broad support for UHW’s current leadership. Paul Bell-Tull, a social worker with Kaiser Vallejo, explained to the hearing that 8,000 members had come to the hearing from as far as San Diego to express their commitment and to show their support for UHW’s leadership. (9/27 Tr. 223:5-7.) Kim Johnson summarized the message of many members, explaining that “the best evidence against the trusteeship is the fact that the membership, everybody here, believes in their leaders. They believe in this union and they support it, every day, in all of their actions.” (Id., 219:12-16.) Members repeatedly praised UHW. Pam Smith, a certified surgical technologist at Kaiser Sunset for 25 years, said, “Sal has gotten for us what no other union has gotten for us or anybody else.” (9/27 Tr. 216:4-6.) Pamela Wilson, an in-home care worker from Yolo County, agreed, explaining that “without Sal we wouldn’t have what we have now.” (Id., 219:5.) Many other members declared their support for UHW’s leadership, including the following:

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State Council, informed him that she was ordered by the State Council not to testify at the hearing. (Kumar Tr. 816:5-12, 845:20-846:10.) Many more had expressed their desire to speak but were unable to because time ran out or because they had to leave before given the opportunity.
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ƒ

Anita Jaysic, Oakland Kaiser, said, “Sal is a good leader. Sal care[s]. He cares about the people. He knows that we can talk to him. We can hold his hand. He cries with us. This man is a good man.” (Id., 235:15-18.)

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Lisa Thomas, X-ray tech at Santa Clara Kaiser, similarly explained: “this union right here, they know what democracy is about. They know how to represent their members. They know how to bargain contracts. They know how to vote politics. They know what’s right for the Californian’s healthcare. They know what’s good for the labor movement.” (Id., 257:23-258:3.)

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Mr. Sanchez, Kaiser, Baldwin Park, and a union member for nine years, felt similarly, indicating that he “believe[s] in this union. It’s done great things for my family. And I really believe that this is the wrong thing to do, put us in trusteeship.” (Id., 260:25261:2.)

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Emily Ryan, a social worker at Kaiser in Folsom, said: “I love UHW. . . I appreciate this union. I’m so grateful to be a member of this union. And I ask you to please keep us out of trusteeship.” (Id., 279:9-280:3.)

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Cheryl Peacock, Kaiser Vallejo, informed the hearing that “we are the network. We are going to stand with [Sal]. . . . We all have faith in our leadership.” (Id., 268:17-20.)

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Spencer Gross, a clinical psychologist with a doctorate in psychology who had been practicing in Kaiser for 20 years, informed the hearing that he had “never seen any behavior by Sal Rosselli as anything but principled and in support of the labor movement in general and in support of the importance of the voices of local union members.” (Id., 274:22-275:1.)

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Sharon Jankowski, from Good Samaritan Hospital in San Jose, said that she had met Mr. Rosselli seven or eight years prior, and explained that “if it wasn’t for him, we all wouldn’t be here right now, because we all have everything in the world that we need in our contracts and then some.” (Id., 272:15-18.)

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John Schwartz, from Dominican Hospital in Santa Cruz, said: “We respect Sal. We respect John.” (Id., 278:8.)

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Carmen, from Providence Health System, brought a message from her 900 members to the hearing, and advised that she loved Sal and John and that her members had a wonderful contract. (Id., 287:25-288:11.)

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Jenny, a single mother who has worked for Seton Medical Center for almost 22 years, declared, “we want Sal and John to stay with us.” (Id., 291:5-6.)

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Brian Rose, chief steward at O’Connor Hospital for 22 years, told “Sal, Dan, [and] John” that “we got your back.” (Id., 239:2.) Members expressed confidence in their leadership’s integrity. Nasbat Poti, a nursing

assistant at Kaiser Oakland for 17 years, said: “our union is strong. Our union is taking care of us, taking care of our patients. There is nothing we can complain about our union . . . We trust our union.” (Id., 275:10-16.) Jim Chandler from Regional Medical Center of San Jose, stated that “in 1999 . . . [Local 250] came and they helped us organize. . . . [A] lot of lives have been changed and we trust our leaders.” (Id., 248:23-249:2.) Similarly, a member from Kaiser Modesto declared that “John and Sal are answering to us. They work for us . . . They don’t hide nothing from us . . . I am proud to be UHW. This is a great union and great leader.” (Id., 237:57; 237:20-21.) Brian Rose, chief steward at O’Connor Hospital for 22 years, also pointed out: “There was no corruption here. There was no cigar bars going on. There was no backroom deals. We are open. We are democratic. We are transparent.” (Id., 240:6-8.) Spencer Gross, a clinical psychologist with a doctorate in psychology who had been practicing in Kaiser for 20 years, similarly pointed out that in the International’s hearing notice, there were “no allegation of misuse of funds for any personal gain or profit; No trips; No cars; No swimming pools; No nepotistic jobs; And, as far as I know, no cigars.” He continued, “[s]o, this attempt at trusteeship . . . only makes sense within the political contest which has been described, this struggle for democratic local control of unions.” (Id., 274:10-20.)

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Members expressed pride in the growth of UHW and its success under Sal Rosselli’s leadership. Hans Nelson, a medical-legal clerk for Kaiser South San Francisco for 19 years, said: “Sal, you remember. 19 years ago, I was there at 25,000 members when they called us a little peon union. I was there at 50,000 members as we celebrated our growth. I was there at 100,000 members when we thought we was doing something. And now that we’re on the verge of 200,000 members, I understand Andy Stern’s position. . . . And I understand that Andy Stern is trying to go over and take over because there is powers in numbers.” (Id., 258:13-25.) Similarly, Ruby Guzman asserted that “UHW is not a sellout. During our bargaining the company was waiting to get that proposal from another Local in the south, 6434, and they sold their companies out. They gave poor mediocre wages. What UHW did for us, they gave us a wage scale that became equal to Kaiser wages. That is so significant in contracts. Because of that, I don’t have to work two jobs. I can remain in one job, have health insurance, and still continue my education, and . . . all the members, we’re all united. We’re here because we want to be with UHW.” (Id., 255:12-22.) Tammy Buckles, the chief steward of El Camino Hospital, talked about the mediocre benefits her previous union had obtained and explained, “now that we’re part of UHW, we know what it’s like to win for a change.” (Id., 221:20-21.) Ms. Buckles expressed concern that conditions would regress if SEIU were put in charge, stating, “you can’t tell me that now, because of this trusteeship hearing, you’re going to take that all away from everybody at El Camino, or anybody in our union.” (Id., 222:9-12.) Members testified that UHW improved the terms and conditions of their employment. Anne Willard, a Laboratory Scientist at Sequoia Hospital, part of CHW, and Tammy Buckles, the chief steward at El Camino Hospital, indicated that their terms and conditions had significantly improved when they changed from other SEIU unions to UHW. (Id., 221:9-222:8, 280:20-281:2.) Ms. Buckles explained that “now that we’re part of UHW, we know what it’s like to win for a change.” (Id.) Others said that even when they had previously been members of smaller unions, they would be able to use the deals that Local 250 had obtained to get better terms for themselves — the “me-too clause.” (Id., 287:4-8.)

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Members expressed their preference to elect their own leaders and not to be disenfranchised.27 Pam Reese, a radio tech and medical worker for 30 years, spelled out the members’ view, stating, “I told [Stern] that we needed to have our people have a vote.” (Id., 206:14-15.) Tanya Britton, a CNA from Fremont and member for 11 years, explained the view of many members, stating, “we can definitely voice our opinions; and, if we thought something was wrong, we would have been the first to say it. . . . We’re smart, we’re intelligent, and we’re very active. So, if we wanted to get rid of our elect[ed] leaders, we would have done that . . . [w]e want to keep them; and, if we don’t, we’ll make that decision . . . .” (Id., 228:3-13.) Ju’Anna Baiah, a member of the UHW Executive Board, similarly said “we run a democratic union where, the same people we vote in, we have a right to vote out. . . . And the rank-and-file members are the ones . . . who have the right to speak on it.” Many other members declared support for their right to elect their own leaders, including: ƒ Kim Johnson, a phlebotomist at El Camino Hospital, who said, “This trusteeship is about somebody being singly appointed to take over an elected body which was elected by the members. [The rank and file] will not let that happen . . . So, I urge you to consider that the reason trusteeship should not happen is because the members believe in their leaders and believe that their Board is their[s].” (Id., 220:7-14.) ƒ Della Marie Reed, a nurse at California Pacific Medical Center, explained that “our union is a democratic union where members have always come first. Our members are the ones who have buil[t] our union . . . we have decent, reliable, well-respected members, leaders. All of our leaders are respectable.” (Id., 207:8-13.) ƒ Debbie Alederos, chief shop steward in Modesto, informed the hearing that she could “call Sal and he’ll answer me. If I have a problem, Sal answers me; but it’s not Sal’s

In contrast, members who had spoken with Andy Stern concluded that he did not believe in democracy or elections. (Id., 205:16-19.)

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union. It’s not John’s union. It’s our union. This is how we vote. This is our voice. It’s our union.” (Id., 247:18-21.) ƒ Debra Pataski, registered dietician with Kaiser, advised that “if anything was done wrong, we will take care of it. It’s our family. It’s our house. We will clean it.” (Id., 248:16-18.) ƒ Suzette Walker, a 30-year CHW employee and UHW steward, stated, “We have worked long and hard to become the respected Local that we are. We are committed to equality for all of our members — our elected — not appointed — but, our elected leaders. . .” (Id., 251:18-21.) ƒ A worker from St. Luke’s hospital explained that “[i]t’s our union. We elected Sal Rosselli and we want to keep it that way.” (Id., 282:1-6.) ƒ Irma Ellis, a Unit Clerk at California Pacific Medical Center, St Luke’s Campus in San Francisco, and a member of the union for 16-18 years, explained: “We have been members of this union for a long time and if we have any problems with this union, we, the members, will stand up and fight. We do not want to be trusteeshipped. We do not want someone to come in and dictate to us as to what we should do. We pay our union dues, so we should have a voice in what is done with our monies and what decisions are made for us this afternoon.” (Id., 282:21-283:2.) Members testified that they were involved in the decision-making process and that members are kept informed about UHW activities. For example, Marty Dougherty, a member from Stockton and Modesto, testified that “[w]hen a decision is made in UHW, the members have some say in it. And we can go to our leaders and say, who made these decisions? and get an answer. And we do not follow our leaders blindly. We ask questions. We talk about it in committees. We go to meetings and find out what’s going on. And then we say yes we go along with your decision, or maybe we need to rework that and not just say, hey, okay, whatever you say.” (Id., 241:10-17.) Emily Ryan, a social worker at Kaiser in Folsom, explained that “[a]s a member of UHW, I have my rep’s home phone number. We have stewards. I can catch my rep

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at 9 o’clock at night; and I have a copy of the financial report at my house right now. I have access to information about this organization at every level. I can show up at the office. I can ask for anything that I want and it’s handed to me.” (Id., 279:18-24.) Teresita Collado, from Kaiser Sunset, stated that “[o]ur leaders are elected. If we sat at a meeting, we’re representing our members. We are responsible to tell our members. We don’t hide anything about anything that we do.” (Id., 213:7-10.) Member Anita Cook said that “UHW is the only union that I know that I can go to and go ask Sal, can I look and see what’s going on? I can go in and look in any kinds of files. I can look in anything. There is no secrets. . . . So when this information came out, I went to the people that were on the Board of that PEF . . . and talked to them . . . .” (Id., 231:5-8, 232:24-233:1.) Similarly, Suzette Walker, a 30-year CHW employee and UHW steward, explained, “[o]ur elected leaders with the assistance of our shop stewards and our field reps keep us informed about us, the members, to make decisions that affect our everyday life.” (Id., 251:21-24.) Linda Beckham, Northern California Kaiser employee, also explained that “when I was an Executive Board member my job was to go out and share with the convalescent homes in my county and share with them what was happening. I also know that I was supposed to carry with me the financial records. This is a longstanding practice. I also know that as a dues-paying member of UHW, I have the right at any time to go to an Executive Board meeting. I have the right to listen to what is discussed; and I do whenever it’s in my schedule and it is scheduled in Northern California. I’m one of the people that you will see there.” (Id., 263:4-14.) Members testified that they were aware of the Education Fund. Paul Silveria, a UHW member who came to support UHW despite being married the day before, explained that “[t]here’s a lot of discussion on transparency and several of the attorneys have asked about the PEF and several other funds that I, as a member, am very well aware of; and where the money went and how it was spent.” (Id., 264:8-11.) Butch Cole, a surgical technologist from Watsonville Community hospital and former Executive Board member, also said, “[o]ne of the things I can tell you from the Executive Board was that it went to the point of annoying on how

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we had to listen to every single penny that went anywhere . . . I’m not on the Executive Board, but I knew about the Patients Education Fund.” (Id., 252:17-25.) Members voiced concern about harm they might suffer if Andy Stern controls UHW. Paul Bell-Tull, a social worker with Kaiser Vallejo, explained that he distrusted SEIU because “they have excluded our members from the bargaining table and they have signed off on contracts that would . . . have limited our right to advocate for patients’ rights, which is just amazing that they will sign off on contracts that bargaining unit members would never sign off on if they were allowed to vote on them.” (Id., 224:9-16.) Pam Smith, a certified surgical technologist at Kaiser Sunset for 25 years, also expressed her doubts about SEIU, explaining that “[Andy Stern] wants to take it away from Sal, which would be the worst thing for all of us. Because, if Andy Stern took over, we lose.” (Id., 216:7-10.) Torianto Yeargin, Sunset Kaiser Division Council, asked, “What has SEIU done for us?” He continued, “[t]he whole point of this process, you’re saying, is about trusteeship. It should be about what’s best for the members. Time and time again, UHW has proven that.” (Id., 214:3-6.) Spencer Gross, a clinical psychologist with a doctorate in psychology who had been practicing in Kaiser for 20 years, informed the hearing that “trusteeship, certainly, will not serve our members.” (Id., 275:2-3.) A worker from St. Luke’s hospital stated his opinion that an appointed leader would ruin UHW. (Id., 281:25-282:1.) Beverly Griffith, from Sutter Health, said the trusteeship hearings impacted the negotiations she was conducting at the time. She said that management was proposing to take away member rights such as seniority and allowing subcontractors. She explained that Sutter Health management was waiting at the door to see the result of the trusteeship hearing. (Id., 245:3-7.) John Schwartz, from Dominican Hospital in Santa Cruz – part of Catholic Healthcare West, indicated to the hearing that as a member of the CHW bargaining team, he was experiencing a similar reaction from CHW. CHW was not bargaining and was waiting to see what would happen at the hearing. (Id., 278:8-11.) A worker from St. Luke’s Hospital reported a similar situation with their attempts to bargain with CPMC. (Id., 281:19-24.) Sharon

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Janowski, from Good Samaritan Hospital in San Jose, also expressed concern for patients under trusteeship. (Id., 272:23-24.) G. Hundreds of UHW Members Have Submitted Letters Opposing President Stern’s Attempt To Put UHW in Trusteeship

Hundreds of UHW members have submitted letters to the Hearing Officer urging him to reject trusteeship and affirming their support for UHW’s current leadership. Some examples are included below: Members repeatedly praised UHW and its leadership: ƒ Aneita Wiltz, a nursing assistant since 1979, and currently Chief Shop Steward of Golden Cross in Fresno, CA and an Executive Board Member, wrote, “[w]hen we have asked our Pres. Sal to come to Fresno he has made it a point to come to our facility and spoke to our members — which gave our members a feeling of belonging to the best union in the world.” (10/18/08 Wiltz Letter, at 2.) ƒ Consuella Lewis, an optician at Kaiser Stockton for eleven years, wrote: “UHW has a strong record of organizing, campaigning and making sure the members have a voice and a place at the bargaining table . . . UHW leadership are honest and I have trust that they have their members best interest at heart.” (Lewis Letter, at 1-2.) ƒ Robert Hill, shop steward at Kaiser South Sacramento, and an optician of 25 years, explained, “I feel that our local elected officials are doing a great job representing us and I would like them to continue doing so.” (Hill Letter, at 1.) ƒ William J. Edwards, a shop steward at Kaiser, Sacramento, wrote “Sal Rosselli is fair, open, believable and a strong leader.” (10/22/08 Edwards Letter.) ƒ Deborah Kirtman, the chief shop steward for Alta Bates Summit, an Executive Board Member, and a UHW-member of 34 years, wrote, “[w]e have the Best most honest Leadership in Sal, Jorge, Joan and the Elected Officers . . . member[s] have A Voice! and a democratic choice.” (10/29/08 Kirtman Letter.)

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JoEllen McElroy, a united secretary in the ICU at Antelope Valley Hospital in Lancaster, CA and a healthcare worker for over 35 years, writes that Sal Rosselli and Jorge Rodriguez are “sincere in their devotion to our brothers and sisters and I trust that they have the members’ best interest in mind when making any and all decisions pertaining to UHW.” (11/5/08 McElroy Letter.)

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Verna Hampton, the Chief Steward for the WLA Steward Council, writes: “I’m very proud of my UHW family, our trusted leadership is well respected and appreciated. Sal, Joan, Jorge, Ralph are exceptional individuals who represent our Union with dignity and respect.” (11/7/08 Hampton Letter.)

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Laura Escobar, a 19-year employee at Kaiser Permanente, explained, “[o]ur UHW leaders have been very diligent with informing its members of issues, concerns, expectations and injustices . . . Sal Rosselli and Jorge Rodriguez are superior leaders who walk with the front line workers hand in hand [and] have never given me a reason to not trust their judgment or motives.” (10/30/08 Escobar Letter.)

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Ann Wallace, an employee at Kaiser Roseville Hospital, wrote: “I am proud to be a member of UHW-West. My union ensures fair labor practices for all of its members.” (11/5/08 Wallace Letter, at 1.)

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Joseph Ruocco, a 35-year employee and Representative Chair at Western Medical Center in Anaheim, CA, observed: “[t]here is no corruption in UHW. There are no cigar parties, no golf tournaments, no paying of union funds to fund weddings in Hawaii.” (Ruocco Letter, at 2.) Diane Souza, an employee at Kaiser Foundation Hospitals in Vallejo, CA, and formerly a

member of the Retail Clerks Union, explained that the terms and conditions of her employment had significantly improved when she joined UHW. She writes, “union members[] had no real say in the negotiation of our contracts. The managers and union officials met and decided what was best for us. We were allowed to accept or reject the offer. In the event of rejection, we had a no strike clause in our contract. We had no real say in anything that was negotiated for us. Take

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it or leave it.” (10/15/08, Souza Letter, at 1.) But, as she notes, “[w]hen we voted to join Local 250, our lives improved greatly. We had set schedules. . . We no longer had to work every weekend. Our new contract guaranteed us every other weekend off. Our benefits and salaries improved. We gained job security.” (Id.). Souza further notes: “UHW has been the most open Union that I have ever seen regarding what is going on in its day-to-day business, including financial decisions. My husband belongs to an SEIU Union that is run by one of Andy Stern’s hand-picked employees. He works for the [BART] District. When we compare notes, I can see that he belongs to a 20th Century adversarial Union, while I belong to a forward-thinking 21st Century Union.” (Id., at 2.) Similarly, according to Ms. Wiltz, “[w]e are able to bargain [] contracts for what we feel we deserve — better benefits — better staffing — more supplies for patients’care — better morale.” (10/18/08 Wiltz Letter, at 1-2.) And as Pamela Johnson, a steward at Kaiser Permanente, wrote, “I am privileged to enjoy one of the best contracts in the healthcare field through my employer.” (10/30/08 Johnson Letter.) Members Value Their Right to Elect Their Own Leaders: Many UHW members described the value they place on the right to elect their own leaders. This is a right that would not exist if a trustee were appointed to replace the elected leaders, and members were denied the right to elect their own leaders in February 2009. ƒ Frances Gutierrez, a nursing assistant of 17 years with Golden Living Hypana in Stockton, CA, stated it was “very important to me to be able to vote for officers and executive board members, not ones that are just put there by Andy Stern.” (10/18/08 Gutierrez Letter at 2.) ƒ Marjorie Nord, a nursing assistant of 25 years with Grove Street Extended Care in San Francisco, CA, explained: “I personally feel that the union members’ voices are heard and that we are the heartbeat and the life line of UHW. . . . It is vital that we maintain member control of UHW and that my co-workers and I can have a voice and common interest in our union.” (10/18/08 Nord Letter.)

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Joe Black, an employee at Cedars-Sinai Hospital in Los Angeles, California, explained, “[w]e are members of a union that elect the leaders we trust. They work for us, know us.” (10/11/08 Black Letter.)

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Steve Weisensee, a Critical Care Technician and 20-year employee at St. Barnardine’s Medical Center in San Bernardino, CA, wrote, “I believe in UHW and the integrity of its leadership and firmly support their democratic approach to running a union. I believe it is the way (as did our forefathers) it should be run, through a democratic process.” (10/12/08 Weisensee Letter at 1-2.)

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Flo Furlow, a homecare worker in Fresno, CA, wrote: “Our union is Democratic, and that’s how we run our union. We vote and decide who our executive board is, who our shop stewards are, and most IMPORTANT, WHO OUR PRESIDENT IS!” (Furlow Letter.)

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David C. Whiting, Shop Steward at St. Joseph Hospital in San Andreas, CA, explained how “UHW is a very viable member run union and operated democratically from the bottom up wherein the members elect their officers and representatives. Contrarily, Andy Stern directs the International Union from the top down. He appoints officers, directors, and representatives with little or no input from the rank and file.” (10/8/2008 Whiting Letter, at 1.)

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Myrtle Shephard, a Home Care Worker of 20 years, wrote, “It’s very important that members continue to have a voice, we do the work, we handle the issues and we make the Resolutions. So we should be there to make any decisions that concern [] us.” (10/18/08 Shephard Letter, at 2.)

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Ms. Wiltz wrote: “member voice is rated very highly[.] Our members at our facility are not afraid to speak out — every voice counts.” (10/18/08 Wiltz Letter at 1.)

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Veronica Quiris, a shop steward at Kaiser Richmond, wrote: “[o]ur UHW Leaders Sal Rosselli etc. believe in ‘rank and file’ involvement in the decision dictating our Benefits and wages. Our leaders believe the ‘rank and file’ should be able to vote Democratically

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on our leaders, for our leaders. They believe the ‘rank and file’ should make the important decisions related to our work and our futures.” (Quiris Letter, at 2.) ƒ Tina McClain, a medical office receptionist at Mercy Medical Group, wrote “We beleive [sic] every member has something important to say.” (McClain Letter, at 2.) Members also described their involvement in decision-making and the way they are kept informed. For example, Ms. Shephard wrote, “[o]ur Elected leaders Sal, Joan, and Jorge always keep us on top of what is going on.” (10/18/08 Shephard Letter, at 2.) Ms. Lewis explained that the leadership is “always forthcoming with members on financial matters as well as other matters,” (Lewis Letter, at 1), and Terra Lauppe, an employee at Kaiser-Roseville, and a steward, wrote “[a]t anytime I want a copy of [the board] minutes, I get it.” (Lauppe Letter, at 1.) Moreover, echoing testimony given on the second day of the hearing about UHW leadership’s transparency as to the Education Fund, Marvin Andrews, a steward at Kaiser Workers Comp Lien Hub, wrote, “I am a new Union steward and was immediately knowledgeable of this Fund and its purpose.” (11/6/08 Andrews Letter.) Members Believe that the Union Would Be Worse Off if Led by International: Members who wrote letters also articulated their concern about the way the union would be run under Andy Stern: ƒ Jeanne Pilotte, a 30-year employee of Seton Medical Center in Daly City, CA, wrote, “[w]ithout Sal, without our Union leadership, I believe our members will no longer have a Voice.” (Pilotte Letter.) ƒ Gloria Villasenor, a 12-year employee of Kaiser Healthcare, worried that “[a] few, whether for good or bad, making decisions for all, leads to coruption [sic], as we are now witnessing. Transparency and everyone being involved in any organization keeps everyone working for the greater good.” (Villasenor Letter, at 2.) ƒ Maria L. Monzon-Kong, a medical social worker at Kaiser-Fresno, agreed, stating that he feared SEIU taking over via trusteeship, given its “practice of appointed leadership,” its “way of negotiating contracts without member representation,” its appointment of

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“leaders who are currently facing legal actions for misappropriation of funds,” and its “less favorable contract negotiations” compared to what “UHW has been able to achieve.” (10/17/08, Monzon-Kong Letter.) ƒ Robert Hill, shop steward at Kaiser South Sacramento, and an optician of 25 years, wrote, “the international officers are not listening to us and I do not believe that they have our best interest at heart . . . they seem to want to send us backwards.” (Hill Letter, at 1.) ƒ Patrice Johnson noted that “SEIU has negotiated less favorable contracts than we have been able to achieve with UHW. SEIU has appointed leaders who are now facing legal actions for misappropriation of funds.” (Johnson Letter.) ƒ Dan Anderson, a Steward at Kaiser Permanente, wrote, “If [SEIU’s] history of appointments is any indication as to who they feel are better people to run local unions . . . then we want no part of it.” (Anderson Letter, at 2.) H. More Than 80,000 UHW Members Have Signed Petitions Opposing Trusteeship

More than 80,000 UHW members, over half of the total membership of the union, have signed a petition urging the International not to impose a trusteeship, to stop its attacks on UHW, and to engage in mediation to resolve the political crisis between UHW and the International. (UHW Ex. 215; Rosselli Tr. 980:5-982:10.) Imposing a trusteeship would unfairly disenfranchise these members. Another petition was signed by the organizing committee of the St. Joseph Health System, representing workers who are not yet UHW members, urging the International Executive Board to say no to trusteeship and to allow the members to continue to determine their own destiny. (Rosselli Tr. 982:16-983:2; UHW Ex. 216.) The petition urged the International to stop its attacks on UHW, to commence mediation, and to focus energy on “winning contracts, igniting more workers, and changing the course of our nation.” (Id., 980:23-24; UHW Ex. 215.)

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