INVESTIGATION OF WELFARE AND PENSION FUNDS (LOS ANGELES AREA) FRIDAY, SEPTEMBER 24, 1954 HOUSE OF REPRESENTATIVES, SPECIAL SUBCOMMITTEE ON INVESTIGATION OF WELFARE AND PENSION FUNDS, The subcommittee met, pursuant to recess, at 10 a. m., in room 229, Federal Building, Hon. Samuel K. McConnell, Jr. (chairman of the committee) presiding. Present: Representatives McConnell, Holt, Lucas, and Miller. Present also: John O. Graham, staff director; Edward A. McCabe, general counsel; L. M. Weltmer, special counsel; Russell C. Derrickson, chief investigator; and Carmine S. Bellino, staff consultant. The CHAIRMAN. The hearing will please come to order. Mr. Bodle, I believe you have some testimony you want to give or some statement to make. We are not swearing you in or anything because we are not asking for any testimony. Mr. BODLE. Mr. Rees has a statement he would like to read as secretary-treasurer of the culinary workers of San Bernardino. STATEMENT OF LOUIS J. REES, SAN BERNARDINO, CALIF., SECRETARY-TREASURER, LOCAL 535, CULINARY WORKERS AND BARTENDERS UNION; ACCOMPANIED BY GEORGE E. BODLE, ESQ., LOS ANGELES, CALIF. Mr. REES. My name is Louis J. Rees. I reside at 1141 Mayfield, San Bernardino. I have been for the past 2 years and am at present the elected secretary-treasurer and the executive officer of local 535, Culinary Workers and Bartenders Union. The principal office of the union is in the city of San Bernardino and its jurisdiction covers hotel and culinary workers and bartenders in San Bernardino and Riverside Counties. I am also one of the union trustees of the hotel and restaurant insurance trust fund, which is a trust fund set up for the management and administration of a health and welfare plan. This plan is for the benefit of employees of the hotel and restaurant industry and is paid for by contributions of their employers pursuant to contracts with our union. There are 2 other union trustees and 3 employer trustees. While our industry is not subject to the Taft-Hartley Act, we have, nevertheless, complied with the standards set up by Congress in the TaftHartley Act for the administration of health and welfare funds for the purpose of assuring joint management-labor control and administration. I want to make it clear that I am appearing voluntarily and at my own request. Although an attack was made upon my union Wednesday, I want it known that I was not subpenaed by the committee nor was I ever interrogated by any representative of the committee at any time with relation to either the negotiation of the health and welfare plan or its administration. I make a point of the fact that I was not subpenaed by the committee or interrogated by it because Wednesday, approximately 4 hours of the committee's time was devoted to an attack upon my union by Joseph Gee, a restaurant operator in Barstow. If the committee had wanted to learn the facts, they could have found out from me or any other official of my union that the man who allegedly threatened Mr. Gee was not an official of the union, was not authorized to speak for the union and, indeed, was not even employed in the industry at the time of the alleged incident. Mr. Gee knew that Mr. Besk had no authority when he called him and this committee could have found out that he was completely unauthorized if it had sought to do so. Mr. Gee knew who the officials of the union were, and it is significant that his testimony is silent with respect to any attempt to reach them. Yet this committee permitted itself to be used as a forum to convict the union which I am proud to represent as guilty of threats of violence. Every contention that Mr. Gee made Wednesday has been presented to the Superior Court of the State of California and rejected. The union first approached Mr. Gee in about February 1953 for the purpose of obtaining a union contract. Previous to that time, Mr. Gee operated a nonunion establishment. After negotiations, Mr. Gee and the union entered into the contract which is standard for independent restaurant operations in the desert district. The contract included a health and welfare plan for the employees. Under the plan, Mr. Gee was to pay 30 cents per day or 4 cents per hour for each employee to the hotel and restaurant insurance trust fund. It was further agreed that the obligations of the employer in this connection were subject to change only by amendment agreed upon by both employer and union representatives of the trust fund. The employer representatives of the trust fund happened to be members of the Employers Council in San Bernardino. However, there is no prohibition against independent operators becoming trustees and, in fact, they have been invited to attend meetings of the trustees. Following the execution of the agreement, Mr. Gee failed and refused to make payments into the trust fund. In addition, he was guilty of other violations of the contract which he had signed. These violations were in connection with wages and overtime rates provided by the contract. He was contacted by union representatives and given the opportunity to remedy these violations. I personally contacted him in this respect. After he refused to abide by his contract, the union, after receiving authority from its membership by democratic procedures. took economic action against Mr. Gee's business in the form of a picket line. Mr. Gee thereupon commenced a lawsuit against the union and against the Hotel and Restaurant Employers Council of San Bernardino which, among other things, charged that he had been coerced into signing the union agreement and also that the provisions in the agreement for his contributions to the trust fund were illegal. A full court hearing was had in this matter. Evidence was introduced and extensive briefs submitted by lawyers for all parties. The Superior Court of the State of California, in and for the county of San Bernardino, decided in favor of the union and against Mr. Gee. The court specifically found that there had been no coercion of Mr. Gee, and that he had voluntarily signed the union contract. It was, also, found that the provisions of the contract for contribution to the trust fund were completely legal. I have here with me a copy of the opinion of Judge Carl B. Hilliard of San Bernardino. Mr. Lucas. Mr. Chairman, I ask that the statement be placed in the record, and that further reading be dispensed with. This gentleman is going into details of a labor controversy with which this committee is not concerned. I do not believe that it is relevant to this hearing. Therefore, I ask that the statement be placed in the record for reference purposes, and further reading be dispensed with. The CHAIRMAN. My understanding, I will say to the gentleman, and the only reason you were put on now, was that you were to submit your statement. I asked that in the beginning and you were not sworn in. I do not know why this reading is going on here. I do not know why you just did not submit your statement. Mr. BODLE. This is probably my fault. I thought the intention was that he read it. It is my failure to understand the desires of the committee. The CHAIRMAN. You see, he was not sworn, and he is making statements here. Mr. BODLE. I understand that. However, I want to point out this is the only opportunity we have to refute the charges which were heard for a period of about 4 hours on Wednesday, from Mr. Gee, with reference to what we considered a labor controversy, too, and not a matter relating to health and welfare. As you know, on Thursday, the papers were full of Mr. Gee's testimony, which directly accused the union of having engaged in unlawful acts in an effort to get a contract. Mr. LUCAS. I disagree with you, Mr. Bodle. I do not know that any direct reference was made to the union in claiming that the union. was responsible for those attacks or those threats. If so, the man would have a right to place in the record his defense. As I remember Mr. Gee's testimony, it was to the effect that someone representing the union, who is now denied to have been representing the union, threatened him. Mr. BODLE. That is exactly right. But this is the only opportunity we have to say that the man who Mr. Gee said was a union representative was not in fact a union representative, and that Mr. Gee knew this. Mr. LUCAS. I do not recall that Mr. Gee said that, and counsel sustains my memory on it. Mr. BODLE. I have to refer to the account which appeared in the Times, in which the statement was made. Mr. MCCABE. Mr. Chairman, I do not believe that appeared in the record, that this man was identified as a union representative. I am going on memory. Mr. LUCAS. I insist on my motion, Mr. Chairman. Mr. BODLE. I might say, Mr. Chairman, there is only about another page and a half of this statement and it will be completed. We will cut the last portion of it out. The CHAIRMAN. All right. Mr. LUCAS. I will withdraw it. The CHAIRMAN. You may finish it, and then we will swear you in that you told the truth, under oath. Mr. REES. The court found instead that the so-called independent union was in fact dominated, controlled and financed by Mr. Gee and was not a bona fide labor organization. Even following this decision, Mr. Gee still refused to make payments according to his contract into the health and welfare fund or to remedy other contract violations. The money still had not been paid upon termination of his 1-year contract in February 1954. However, about this time, the trustees themselves sued Mr. Gee for the money due the fund and were awarded the full amount due by the court, plus attorney fees and court costs. As in all other instances, a full hearing on all the facts was afforded Mr. Gee. Subsequent to February 15, the Gees refused to negotiate with the union with regard to a new contract. Again economic action was taken by the union in the form of a picket line. The now famous phone call to which Mr. Gee has testified occurred during this period. I cannot too strongly emphasize that this phone call was made by Mr. Gee and not by the union. Also, that the phone call was made to a person who was in no way connected with the administration of the union's affairs and had no position within the union. Whatever conversation took place could not possibly have any bearing on the subject of this investigation. In fact, to the best of my recollection, the entire question of unpaid contributions to the health and welfare fund was at that time in the hands of the attorneys for the trust fund and was no longer a subject of discussion insofar as the union was concerned. At this time, I wish to state that we consider the recording of the telephone conversation, for whatever purpose it was done, to have been in violation of public policy and I trust the committee will lay the facts of this matter before the appropriate law-enforcement officials for action. I would like to take a moment at this point to comment on the testimony of Mr. Lutes in connection with the reason for his resignation as a trustee. I believe he stated that he had resigned when the other trustees, including the employer representatives, voted to expend a sum for attorney fees in connection with defending the suit filed by Mr. Gee. I might say that I personally did not attend the meeting at which this vote was taken. Had I been there, I certainly would have voted for the expenditure of such a sum. The trustees had been advised by counsel for the trust fund, that the lawsuit constituted a serious threat to the legality of the trust fund itself. We were further advised that it was our duty as trustees to defend and uphold the trust fund against attack. Therefore, not only was it advisable at the time that the trust fund counter this challenge against its legality but also it was our legal duty as trustees to do this or to suffer the possible consequence of being charged with a breach of our duty as trustees to the thousands of working men and women who are the beneficiaries of this trust fund. I might add that the attorney for the trust fund at that time did not in any way represent our union or have any connection with it. I have made this statement in the hope that it will clarify a great number of misconceptions which I am sure resulted from the testimony of Wednesday. The record and achievement of our trust fund and our union in connection with the establishment of this joint employer-union trust fund is one of which we are justly proud. We have been providing, and will continue to provide, for employees in the hotel-restaurant industry, medical, hospital and life insurance benefits which the employees of our industry could not afford on an individual basis. We stand ready at any time to have any of our affairs looked into and investigated. The CHAIRMAN. Would you please stand and raise your right hand? Do you solemnly swear that the statement you have made is the truth, the whole truth and nothing but the truth, so help you God? Mr. REES. I do. The CHAIRMAN. Thank you. Mr. BODLE. Mr. Chairman, I would like to introduce in evidence this memorandum decision of the court in the Gee case. Do I give that to counsel ? The CHAIRMAN. Counsel, will you look that over? (Document handed to counsel.) Mr. MCCABE. Mr. Chairman, this purports to be a copy of a memorandum opinion by Judge Carl B. Hilliard, of the Superior Court of the State of California. I would suggest that this be accepted along with the statement just read for committee reference purposes. The CHAIRMAN. Without objection, it is so ordered. (The information referred to was filed with the committee.) Is Mr. Dandy here? Raise your right hand. Do you solemnly swear that the statements you are about to make are the truth, the whole truth, and nothing but the truth, so help you God? Mr. DANDY. I do. TESTIMONY OF JOHN PERCY DANDY, VICE PRESIDENT IN CHARGE OF GROUP INSURANCE OPERATIONS, OCCIDENTAL LIFE INSURANCE CO., LOS ANGELES, CALIF., ACCOMPANIED BY J. STUART NEARY, OF GIBSON, DUNN & CRUTCHER, LOS ANGELES, CALIF. Mr. WELTMER. Will you state your name, please? Mr. DANDY. John Percy Dandy. Mr. WELTMER. Your address? Mr. DANDY. The office address, Occidental Life, 1151 South Broadway. Mr. WELTMER. Your position in the company? |