UAW lawyers skirt the rules of law; some observers charge that, in winning a controversial jury verdict, the United Auto Workers legal team used shady tactics that amounted to obstruction of justice

0 Comments | Insight on the News, July 22, 2002 | by Michael F. Munday

Huzzahs in Las Vegas at the United Auto Workers Union (UAW) convention celebrating president Stephen P. Yokich's seven-year tenure have died and the confetti is on the floor. Now it's time for the cleanup.

Under Yokich, UAW coffers swelled with the dues of office and technical workers, university graduate students and state welfare workers, diluting the influence of actual autoworkers. And UAW investment portfolios, formerly handled with prudence, began to bulge with a professionally designed golf course, an elaborate education center, a Palm Springs resort, an apparently failed airline, computers and Internet-service providers for UAW members--and a bankrupt radio network. All allegedly were "cutting-edge" projects, justified as training and education funding.

However, with the radio network, Yokich and the UAW may have gone over the edge.

Already under congressional and U.S. Labor Department investigation for dipping into UAW pockets for what estimates say is no less than $5 billion--and perhaps as much as $17 billion--in barely visible training and education projects paid for from union "joint funds," the UAW may bear additional heat for what most thought was a final settlement of challenged union ownership of the radio network.

Three judges of the Michigan Circuit Court in Ann Arbor are probing circumstances of apparent court tampering by legal representatives of the UAW in connection with the union's dubiously acquired radio network. An investigation by INSIGHT into actions by lawyers for the UAW, including one of Michigan's leading law firms, has uncovered surreptitious activities involving court records before and during a high-stakes jury trial last summer. A review of the trial record shows the UAW stood to lose more than $100 million in that trial, which finally was to have settled questions about the union's investment in and current ownership of a radio network with 300-plus affiliates.

To what, if any, additional civil liabilities the lawyers' actions expose their client and employer, the UAW, is unknown. Moreover, Michigan law-enforcement and court officials tell INSIGHT that until investigations are complete it remains unclear whether the actions by UAW legal representatives will be subject to sanctions under court rules alone, additional professional and state grievance proceedings or (ultimately) criminal prosecution.

But one officer of the Michigan courts system calls activities like those the UAW lawyers undertook "akin to breaking and entering into the house of the court." The issues involved are believed to present a quandary for Michigan courts unprecedented in the history of the state's common law. "I've never heard of anything like this before" an authority on Michigan rulings in legal ethics and the common law tells INSIGHT.

The UAW legal team--including the union's chief counsel Dan Sherrick; the Detroit firm of Bodman, Longley and Dahling; and Ann Arbor litigators Dick Soble and Jonathan Rowe--won the trial in Ann Arbor with a jury verdict Aug. 3, 2001. Their strategy (called "brilliant" even by observers partial to the other side) was to simplify the complexities of a timing-sensitive contract tort to a story about bad faith and devious actions perpetrated against the UAW by their erstwhile partners in the radio deal [see "UAW Downsizes Its Own Company," Aug. 9,1999]. The UAW claims depicted a union protecting its treasury from depredations by a bunch of money-grubbing rascals trying to make big bucks by selling the UAW a pig in a poke.

In 1996, United Broadcasting Network (UBN)--renamed by the UAW "ie america"--was bought by the union and a group of media entrepreneurs led by economist, author and former U.S. vice-presidential candidate Pat Choate. Joining Choate in development of the network were Chuck Harder, a radio gadfly and broadcast entrepreneur, and Helen Dorsey and Edward Miller, who Choate convinced to run the business operations of the network and orchestrate the investment proposal into which UAW bought.

In April 1997, the UAW filed in the Michigan Circuit Court in Ann Arbor against Choate and its other former partners seeking recovery of about $200,000 in expenses the union claimed were incurred illegitimately in the project's development and once operations began. Before that filing Harder settled separately with UAW for approximately $2 million. The remaining members of the Choate party filed against the UAW to recover the value of their stock in UBN with claims that the union had followed a "loan-to-own" scheme and bankruptcy cram-down to seize ownership of the politically influential network.

The Choate-party case was a complex breach-of-contract lawsuit based in part on what appeared to have been a concerted plan by UAW to drive the value of the radio network down. That way UAW could keep the bankrupt network's pieces as a propaganda arm to further the union's political agenda--and as a more than $11 million tax write-down, good until 2015.

After four years of maneuvering, the UAW and Choate-party cases came to trial on July 9, 2001. Prior to the trial, Washtenaw County Circuit Court Judge Melinda Morris had issued a set of rulings that allowed the Choate-party contract-tort claims against the UAW. Throughout the trial itself, many of those claims went unanswered by the UAW. Indeed, it appeared to many savvy observers that on legal grounds the Choate party would win. The day after the jury verdict came in for the UAW, a member of the union's legal team was overheard saying that lead UAW attorney Soble "thought he had lost." One of Soble's assistants told INSIGHT that they all were "very relieved" by the verdict. "They really hit one out of the park," she said.