U.S. Labor Department upholds BLE claim that UTU misused Job Benefit Fund

In a major setback for the United Transportation Union (UTU), the U.S. Department of Labor agreed with the Brotherhood of Locomotive Engineers (BLE) in ruling that the UTU had misused millions of dollars in its Job Benefit Fund/Income Security Program (JBF/ISP).

In short, the Department of Labor said the JBF/ISP is covered by Title 1 of ERISA and that the UTU improperly used nearly $11 million to fund union operations. UTU may potentially be liable to JBF/ISP premium payers for repayment from the union's General Fund to the JBF/ISP Fund.

The significance of this Labor Department ruling is that it completely vindicated the BLE's position that merger with the UTU was financially risky because of these questionable transactions.

Citing the potential violation of unemployment insurance law, the BLE warned the UTU and then ended all unification talks in May of 1999. However, the UTU ignored the BLE's concern, claiming it had legally used the JBF/ISP and that the BLE had fabricated the story to derail unification.

"We have been proven right once again," said BLE International President Edward Dubroski. "And once again, Charlie Little and the UTU have been proven wrong. We did the right thing and protected our members from an $11 million liability. No merger with any union is worth that price."

The Department of Labor ruled that the UTU International misused approximately $11 million in JBF/ISP funds. It borrowed approximately $10 million from the JBF to pay off two infamous legal judgments - the Blankenbaker and Wilhelm cases. In addition, the UTU raided the JBF of more than $600,000 to purchase and outfit its political tour bus, "Membership 1."

So far, the UTU has not reported this major setback to its membership. During the summer, UTU International President Charles L. Little still claimed that the BLE had made up the story about JBF/ISP just to scuttle unification.

Confident the Labor Department would side with it over the BLE on the JBF/ISP issue, the UTU asked it to determine which union's position was correct. After the Labor Department ruled against it in late October, Little sent a memo to UTU officers saying he intends "to litigate this issue against the DOL."

Little has now suffered two major government setbacks in cases he promised UTU members he would win. In addition to losing his case at the DOL over the JBF/ISP issue, he also lost last March when a special labor panel appointed by the National Mediation Board stopped the UTU from forcing an unfair representation election on the Union Pacific Railroad and eliminating the crafts of locomotive engineer, conductor and brakeman. In both cases, Little has said he is appealing.


2000 Brotherhood of Locomotive Engineers