Union Makes Rare Move of Filing for Bankruptcy
A Pomona-based union local of the United Food and Commercial Workers has filed for protection from creditors in bankruptcy court, the latest step in a legal imbroglio rooted in a strike that took place more than a decade ago.
The petition under Chapter 11 of the U.S. Bankruptcy Code--highly unusual for a labor union--stems from a lawsuit brought by grocery store owners who said they were driven out of business by illegal union activities in the 1970s. In March, a Pomona Superior Court jury agreed, awarding the owners $5.8 million in their suit against Local 1428, an amount that later was scaled down to $5.5 million.
“They (the union) don’t have that much money, and this is simply a tremendous verdict against them,” explained Robert A. Bush, an attorney for the 6,000-member local, which is composed mostly of supermarket clerks in the Pomona-Ontario area.
What triggered the request for bankruptcy relief, however, was the owners’ move on Monday to attach the union’s assets.
Union Appeals Case
“They were within 10 days of taking $700,000,” Bush said in reference to the various funds administered by the local. The union, whose assets also include a headquarters in Pomona, is appealing the case.
In addition to the appeal and bankruptcy proceedings, the union also is suing Ohio Casualty Insurance Co. for allegedly mishandling the case.
The thorny dispute stems from a 13-month strike in 1975 and 1976 by the union against Chino Farms Market, a grocery store in western San Bernardino County. Union members were accused of scaring off customers by blocking doors, placing tacks under the tires of cars in the parking lot and other intimidating tactics during the prolonged job action. The case was pending for years, with the jury’s decision coming only in early March.
A press release prepared this week by the union set off a series of charges and countercharges between the opposing parties on Friday. In the statement, the local said that the attempt to take over its assets was made despite “explicit promises” by the opposing attorneys that such a move would not be taken.
To prove the point, Bush provided a document signed in March by himself and Gary Cripe, an attorney with the firm of Herbert Hafif, which is representing the owners of the grocery store. The document appears to say that the union would be promised “five working days notice” before legal moves to take over its assets.
‘Patently Untrue’
Harold S. Bottomley III, an attorney in Hafif’s firm, said Friday it was “patently untrue” that any such promises were broken.
And in a sharply worded response, Hafif said his firm had tried to start negotiations with the union.
“We got the word back from union members that Sooter (Larry D. Sooter, president of the local) considered us stupid for not (taking over the assets) while assets were being transferred,” Hafif’s statement said. “Patient we are; stupid we’re not. And this is not a dispute about notice--which was given. It is a dispute about the misuse of union power.”
Sooter could not be reached on Friday, but attorney Bush said: “It is absolutely 100% false that any assets were transferred. Period. . . . I think Herb Hafif likes to justify what he does by attributing it to unknown union members.”
There have been well-known cases recently in which the losers of big judgments have sought refuge in Chapter 11 bankruptcy, the most notable being Texaco’s petition in April, after its loss of a multibillion-dollar suit to Pennzoil.
Uncommon for Unions
Such actions are less common among unions, because, as one observer of the labor movement pointed out, the image-conscious “parent unions don’t normally let it happen.”
Executives may keep their jobs and the organization can continue to function in such circumstances, while it attempts to solve its financial troubles, under supervision of the bankruptcy court. In recent years, locals of the Teamsters and American Federation of Television and Radio Artists have filed for bankruptcy protection.
