A federal court of appeals upheld a 2010 civil judgment against John Vellardita, now executive director of the Clark County teachers union, and other leaders of his former union in Oakland, Calif., ordering them to pay $1.5 million in damages to the parent organization of United Healthcare Workers-West.
The 9th U.S. Circuit Court of Appeals supported the original federal court ruling against Vellardita and others for conspiracy to make their union ungovernable, destruction of files and property, violating union bylaws and breaching fiduciary responsibilities, according to the judge’s March 26 opinion.
Of the 17 people named as defendants in the lawsuit, Vellardita was ordered to pay the largest chunk, $77,850, to the Service Employees International Union.
“The (courts’) decisions have been wrong,” Vellardita asserted last week. “But if we’re required to settle up, I’ll settle up.”
Vellardita now wields administrative authority over the Clark County Education Association, which bargains for more than 17,000 Clark County School District teachers at a time when labor relations are strained and the union-founded health trust is foundering. CCEA President Ruben Murillo was aware of the judgment against Vellardita before he was hired in 2011, but said Vellardita brought with him “vast experience in negotiations.”
In Oakland, Vellardita was head of the long-term care division of United Healthcare Workers-West, a chapter of SEIU, the nation’s largest health care union with 1.2 million members. But word had trickled down that the SEIU was going to take the local union into trusteeship and likely replace its leaders, in part because of financial improprieties.
In reaction, Vellardita and the union’s inner circle went “rogue,” plunging their own union into disarray while starting a rival union, according to the March opinion of federal Judge Richard Tallman.
They had “one mission: to discard the charred remains of a weakened UHW while simultaneously starting a competing local union of their own,” Tallman wrote.
But that’s not the whole story, and the lost appeal isn’t the end of the case, Vellardita maintained Thursday. He and the other defendants — including Clark County Education Association organizer Marti Garza, who was brought here by Vellardita — plan to appeal to the nation’s highest court.
The U.S. Supreme Court will be given new evidence that Vellardita claims would reverse previous decisions in the Oakland case. But will the court accept the evidence?
The new twist is that Tyrone Freeman, who represented about 190,000 home-care workers as a leader of the SEIU was found guilty in January on federal charges that he stole tens of thousands of dollars from his low-income members, according to the Los Angeles Times.
Considering that, the subversion was for good cause, an attempt to protect 65,000 members of UHW, Vellardita said. SEIU was going to put those members under a local union controlled by Freeman, which Vellardita and the others claimed to be corrupt in the original court case. However, Freeman hadn’t even been indicted at that point and the federal court wouldn’t allow the evidence.
Any questionable leadership of SEIU is “irrelevant,” Tallman upheld in the appeal. Regardless of whether SEIU is a “model international union,” federal labor law requires union funds to be used for the benefit of the union.
Vellardita and his group argued that their duty is to “only the rank-and-file members of their local union,” Tallman wrote. “They maintain they have done no wrong.”
But Vellardita’s position “ignores the fact” that his group broke labor laws by using union resources to weaken their own union and form a rival because they didn’t agree with the legal actions of the international union, Tallman said.
The Oakland case centers on the actions of Vellardita, who led an inner circle dubbed Shakers and Makers. The group held secret meetings in Chinatown, ordered that union documents be shredded and members’ contact information be jumbled in the union local’s computer servers. The correct information was placed in off-site databases, according to evidence in the federal lawsuit.
Vellardita and his Shakers and Makers “deserve some recognition for their gall,” Tallman wrote in his March opinion. Having once told the federal court they took no union property, they later returned more than 60 boxes of material to the union when ordered by the court. Shortly before trial, they returned 17 more boxes. “There is reason to expect yet more missing files will turn up,” the judge wrote.
CHALLENGES AT HOME
As Vellardita deals with the fallout of the appeals court decision, he also faces divisions and strife as CCEA’s executive director. Contract talks with the district have gone to arbitration every year since he took the union’s helm, with the two sides clashing over teacher pay raises sought by the union and pay freezes requested by a cash-strapped district to avoid layoffs.
But the most pressing problem before him is one he revealed in February during a closed union meeting — the health trust that insures teachers and their families is foundering. Vellardita has predicted the trust, which has an annual revenue stream averaging $148 million, would be “belly up in 60 to 90 days.”
The trust has lost more than $3.6 million since the fiscal year began July 1 because the cost of claims exceeds the trust’s revenue, according to information presented by Vellardita.
But his depiction of the state of the union-founded health trust has been challenged by Peter Alpert, the trust’s chief executive officer. In March, Alpert called predictions that the trust would soon run dry “far-fetched,” while acknowledging that the trust was struggling, losing about $225,000 a month.
“To state to those who think we are going out of business, I’d say, ‘Talk to me first,’ ” Alpert said in March. “We’re not going out of business.”
The trust holds $28 million in reserves through stocks and bonds, Alpert explained, and can turn that to cash should it become necessary.
During last year’s contract negotiations, the union refused to allow the district to assume responsibility for teacher health insurance though the district coordinates coverage for other employee groups. The district contributes $546 per teacher per month to the union’s trust for health coverage. District payments to the trust totaled $115.4 million last school year.
District officials have said they are watching the issue closely and are prepared to intervene to prevent any lapse in health coverage for teachers.
Contact reporter Trevon Milliard at email@example.com or 702-383-0279.