August 20, 2007: Industry experts say that pension assets are up, but our union’s power will be down if UPS is allowed to break out of Central States.

Industry experts report in this month’s Traffic World that the assets of the Central States Pension Plan are on the rise. They warn that the Teamsters Union will lose long-term power in dealing with employers if we UPS split from the fund.

Traffic World is a leading industry publication read by shippers and investors. Its latest report on UPS negotiations concludes that:

"It is the Teamsters’ pension—and particularly the multiemployer plan—that gives the union much of its draw and power…Wages at nonunion competitors are comparable. It’s the promise of long-term security that will get and keep union members." (Traffic World, 8/17/2007)

The stakes couldn’t be higher as our union bargains with UPS over the future of our pensions.

The good news is that Central States assets are on the rise according to the report.

• "The Central States Pension Plan shows significant increase in assets" with an estimated "$700 million increase in assets through the first six months of the year."

• "Central States’ total assets—about $21.4 billion—would represent a significant increase over the $18.7 billion reported by the fund in 2005…The total could tally $22 billion by the year’s end."

• "The ratio of active Teamsters to retirees has almost stabilized. There are 212,000 retirees and 146,000 active (full-time) Teamsters."

These figures, all of which come from the June Central States Funds Financial and Analytical Information report, have pension experts optimistic.

"They’re working their way back," says pension expert Michael Cagnina, who manages $199 billion in pension assets for nearly 500 clients.

Industry observers say that a withdrawal by UPS from Central States would undermine our union’s power and appeal to nonunion workers—and pension analysts agree. “It would take away from the union’s voice—the workers’ voice,” Cagnina says.

Click here to read the entire report from Traffic World.

Click here to see the fund’s latest Financial and Analytical Report. Note that this report is only available because TDU members went to court and forced the fund to reveal this information, which TDU makes available to participants.

August 17, 2007: Industry journal Logistics Management reports that the IBT has made "substantial progress on the union’s talks with UPS, its largest employer." But according the to the journal: "There has been little if any progress with the unionized freight carriers such as YRC Worldwide and Arkansas Best."

Click here to read the full story at Logistics Management.

August 16, 2007: Labor expert Michael Schiavone credits rank-and-file mobilization and the influence of Teamsters for a Democratic Union with winning the 1997 contract victory at UPS.

“With this being the tenth-year anniversary of the Teamsters’ historic strike with United Parcel Service (UPS) it is a good time to revisit the strike and determine how it was won,” says labor writer Michael Schiavone, the author of Unions in Crisis? The Future of Organized Labor in America.

In a lengthy, investigative article for WorkingUSA: the Journal of Labor and Society, Schiavone writes that the Teamsters won a superior contract in 1997 to Hoffa’s “Best Contract Ever” because the Teamster leadership built power through “militancy, union democracy and rank-and-file intensive tactics.”

“The Teamsters adopted these tactics in a large part because of the influence of the Teamsters for a Democratic Union (TDU). In 2002, the Teamsters, with James Hoffa, Jr. in charge, employed a top-down campaign, with little rank and file involvement.”

Schiavone warns that, “there is a real possibility that the next UPS agreement will also be substandard,” but adds there is reason for optimism.

“If the rank and file pressure the Teamsters hierarchy for a greater say in the UPS negotiations, there is still hope for a good contract,” Schiavone writes.

Click here to read: “Rank-and-File Militancy and Power: Revisiting the Teamster Struggle with United Parcel Service Ten Years Later.”

August 15, 2007: BNA Labor Report: Delivery drivers are employees entitled under state law to reimbursement for work-related expenses, despite their description as independent contractors in an operating agreement they signed with FedEx Ground Package System Inc., a California appellate court ruled Aug. 13 (Estrada v. Fedex Ground Package Sys. Inc., Cal. Ct. App., No. B189031, 8/13/07).

Writing for a three-judge panel of the California Court of Appeal, Justice Miriam A. Vogel observed that "the parties' label is not dispositive and will be ignored if their actual conduct establishes a different relationship." The court also upheld the certification of the case as a class action but sent it back to the trial court for a recalculation of the reimbursable expenses and a reduction in the amount of attorneys' fees to be paid by FedEx.

Anthony Estrada and Jeffrey Morgan sued FedEx under the California Labor Code for reimbursement of their work-related expenses. The trial court certified a class of 209 current and former drivers who performed pickup and delivery services for FedEx on a full-time basis in a single work area. The court found that the drivers were employees and ordered FedEx to reimburse some of their expenses--totaling roughly $5 million--and ordered FedEx to pay the drivers' costs and attorneys' fees, totaling roughly $12.3 million.

In this third appeal, the appeals court considered FedEx's challenges to the trial court's finding that the drivers are employees, the trial court's class certification order, its reimbursement awards, and its attorneys' fee award.

The trial court had found that, for purposes of determining the drivers' right to reimbursement for their expenses, the drivers are employees within the meaning of California Labor Code Section 2802. Subdivision (a) of Section 2802 provides that an employer must indemnify his employee for all necessary expenditures incurred by the employee in discharging his duties. The statute fails to define "employee," so the appeals court looked to the common law, observing that "the essence of the test is the control of details" over the manner in which the worker accomplishes the work.

Justice Vogel analyzed the nonnegotiable "Pick-up and Delivery Contractor Operating Agreement" that each FedEx driver must sign. The agreement specifically identified the driver as an independent contractor rather than an employee. It set forth the parties' "mutual business objectives" and stated that the method of reaching these objectives was within the driver's discretion.

Drivers were required to lease a scanner, purchase or lease a truck meeting FedEx's specifications, mark the truck with the FedEx logo, and pay all costs for the truck. Frequently, drivers relied on a "business support package" from FedEx to fund this equipment, the cost of which they repay by deductions from their weekly "settlements" or paychecks.

However, the court said, the drivers were subject to strict oversight. They were expected to wear a FedEx uniform. Terminal managers supervised and trained them. They worked full time under hours set by FedEx and were forbidden to refuse a delivery. Each driver received an annual progress review. The appeals court concluded that "the drivers look like FedEx employees, act like FedEx employees, are paid like FedEx employees, and receive many employee benefits" and therefore were FedEx employees within the meaning of Labor Code Section 2802.

The court added, "FedEx's control over every exquisite detail of the drivers' performance, including the color of their socks and the style of their hair, supports the trial court's conclusion that the drivers are employees, not independent contractors." Based on these facts, the appeals court rejected FedEx's contention that drivers were independent contractors.

Justice Vogel also upheld the trial court's certification of the class, noting that common issues predominated.

The appeals court also ordered the trial court to revisit the issue of the actual amounts to be awarded to the drivers for their expenses. At trial, there had been a misunderstanding between the parties' lawyers as to whether actual receipts for expenses, such as gasoline and maintenance costs, were required or whether spreadsheets would suffice. The appeals court said FedEx would "obtain a windfall if it was not required to reimburse the drivers for provable expenses that had been part of the case from the beginning."

The appeals court also ordered the trial court to allow reimbursement for the drivers' work accident insurance premiums, which had been disallowed because they were erroneously characterized as "workers compensation."

Attorneys' Fees

Estrada had requested $619,691 in costs and $6,789,325 for attorneys' fees, a total of $7,409,016, plus a 2.0 multiplier as compensation for delay and contingency, for a total of $14,818,032.

The trial court reduced the fee by 18 percent and gave Estrada a total of $12,373,875 for costs and fees, citing the years of intensive litigation involving enforcement of an important right that conferred a significant benefit on a large class.

The appeals court upheld Estrada's right to recover the fees but found the amount "excessive." It ordered the trial court to reduce the amount, noting that the same facts cannot be used to justify both the award and the multiplier. Even though the amount of the fee ultimately is within the trial court's discretion, it must be reasonable, Justice Vogel wrote.

The court also considered several issues raised on cross-appeal by the drivers. It rejected their contention that the trial court should have allowed them to prove their expenses by lay testimony and by expert analysis based on an economic model. The appeals court said such estimates and educated guesses are allowed where damages cannot be proved although here they could easily be proved by receipts and records. It also upheld the trial court's rejection of the drivers' contention that FedEx should reimburse them for the cost of leasing or purchasing their delivery trucks.

Justice Robert M. Mallano and Judge Frank Y. Jackson joined in this opinion.

Estrada and the other plaintiffs were represented by Lynn Rossman Faris of Leonard Carder LLP in Oakland, Calif.; Beth Ann Ross of Leonard Carder LLP in San Francisco; and Ellen Lake of Oakland, Calif. FedEx was represented by James M. Nelson of Seyfarth Shaw LLP in Sacramento, Calif.; Robert M. Schwartz of O'Melveny & Myers LLP in Los Angeles; Chris Hollinger of O'Melveny & Myers LLP in San Francisco; and Jonathan D. Hacker and Walter Dellinger of O'Melveny & Myers LLP, Washington, D.C.

Text of the court decision may be accessed by clicking here.

August 3, 2007: by Thomas L. Gallagher, for Traffic World: UPS reached an agreement in principle with the Central States Pension Fund establishing conditions for a potential UPS withdrawal from the multi-employer pension plan.

The controversial decision to remove 42,000 workers covered under the plan would set the stage for establishing a jointly administered Teamster pension plan for UPS employees. Such an agreement must first gain acceptance by the Teamsters National United Parcel Service Negotiating Committee and ratification by the members.

The Teamsters committee said they will not accept a proposal for UPS to withdraw from Central States unless they are satisfied that it would be in the best interest of all Teamsters who are participants in that Fund, not just the UPS employees.

Specific terms of the agreement have not yet been disclosed.

"While we await official notification of the terms of the settlement, we continue to evaluate the effect on the future of Central States," said James P. Hoffa, chairman of the committee and president of the union.

A dissident group within the International Brotherhood of Teamsters is calling for organized resistance to any withdrawal from the Central States Fund. Teamsters for a Democratic Union said a pension pullout by the union's largest employer would undermine the retirement security of all Teamster members.

The group compared Central States with two jointly administered programs in New York and New Jersey, where UPS has successfully pushed for pension cuts. "Both the New York and New Jersey funds have underperformed compared to the Central States Fund," said TDU in a statement.

Loss of contributions to Central States would also gravely weaken it and endanger the benefits of 100,000 non-UPS Teamster members still covered, said TDU.

July 30, 2007: Under pressure from gay rights groups and New Jersey Governor Jon Corzine, UPS announced that it will offer spousal health and other benefits to union-represented workers in New Jersey who are in civil unions.

The policy change comes after UPS was criticized for excluding International Brotherhood of Teamsters-represented employees from receiving spousal health care benefits for their civil union partners. The Atlanta-based package delivery company initially had denied spousal benefits for these employees in same-sex civil unions because they allegedly were not "married" under New Jersey law.

UPS argued that the civil union law was not the same as a legal "marriage" and therefore it was not able to offer the benefits to IBT-represented employees because the benefits provided in the collective bargaining agreement were limited to "spouses."

Nationwide, nonunion UPS employees and managers and their same-sex partners are eligible for benefits because UPS offers domestic partner benefits, but domestic partner benefits are not included in the current collective bargaining agreement between UPS and IBT.

"Based on an initial legal review when New Jersey's law was enacted, it did not appear that a 'civil union' and 'marriage' were equivalent," Allen Hill, UPS's senior vice president for human resources, said in a July 30 statement. "Over the past week, however, we have received clear guidance that at least in New Jersey, the state truly views civil union partners as married. We've heard that loud and clear from state officials and we're happy to make this change."

In announcing the decision to provide benefits, UPS acknowledged pressure from New Jersey officials, including Corzine, who had pushed the company to change its policy. On July 20, Corzine sent a letter to UPS urging the company to reconsider its decision and explaining that under New Jersey law, same-sex couples who enter civil unions have the same status as married couples (142 DLR A-6, 7/25/07 ).

In his letter, Corzine said the civil union law's statutory language "makes plain that New Jersey law intends that civil union partners be viewed as spouses under all facets of New Jersey law and that a reference to 'spouse' in a legal context, including in a contract, embraces civil union partners."

When UPS initially denied health benefits to Teamsters-represented employees, the company told workers that New Jersey law did not preempt the Employee Retirement Income Security Act and therefore the definition of "legal spouse" under the collectively bargained plan could not be altered to include civil unions. The letter also stated that the company could not unilaterally change the benefits because it was bound by the collective bargaining agreement.

But Victor Palumbo, secretary-treasurer of IBT Local 177, told BNA July 23 that there was "nothing holding them back if they want to improve the package of benefits. The contract doesn't allow them to decrease the benefits without negotiation with us, but they can improve benefits anytime they want. They can improve them unilaterally."

Representatives of Local 177 were unavailable for comment July 30 and a spokeswoman for the international union deferred all questions to the local.

David Buckel, an attorney for two individual UPS employees who were challenging the company's decision to deny benefits, told BNA July 30 that other companies should follow UPS's example when it comes to interpreting employment policies when it comes to differing definitions of marriage under state laws.

"UPS demonstrates for the rest of the employment sector that federal law--like ERISA--does not require an employer to discriminate," said Buckel of the gay legal advocacy group Lambda Legal in New York. "UPS deserves credit for explaining that it was wrong in how it applied the New Jersey law."

Buckel said as more states provide legal domestic partnerships and civil unions instead of marriages to same-sex couples, employers would continue to grapple with how to define terms like "spouse" and "married" in all sorts of employment situations, including leave policies and other benefits.

July 27, 2007: Watch the video that shows how our union won 10,000 full-time jobs, record pension increases and labor’s biggest victory in decades.

Next month, we will celebrate the 10-Year Anniversary of the 1997 UPS Contract Victory—labor’s biggest win in 25 years.

“America’s Victory: the 1997 UPS Strike” reveals the keys to our union’s success—and the strategies we need to put in place to win today.

• Mobilizing Members: Our union’s year-long contract mobilization united Teamsters and paved the way to victory.
• Building Public Support: Our union built public pressure on UPS and won community support that forced image-conscious UPS to meet our demands.
• No Settling Short: UPS’s chief demanded that our union accept the company’s “Last, Best and Final Offer”—but we won record gains by refusing to settle short.

Watch the video that shows how our union can make UPS deliver the contract we deserve in 2008.

Contact TDU if you would like a copy of this video on DVD to show at your UPS building or to other Teamsters.

UPS released its second quarter results today. The company reported a 7.2% increase in earnings per share, and 10.5% jump in LTL revenue.

To read the UPS press release, click here.

July 18, 2007: Some defenders of management’s pension proposal claim that a $4 billion withdrawal liability payment from UPS would fix Central States and safeguard members’ benefits. Unfortunately, that’s just not true.

Find out why at www.MakeUPSDeliver.org

July 13, 2007: National negotiations with UPS again went nowhere this week, and are now temporarily suspended. Bargaining in some supplemental areas is scheduled for the week of July 16.

Read the full story at MakeUPSDeliver.org