Las Vegas stage worker’ labor dispute centers on pension fund

Alana Roberts

Monday, May 10, 2004 | 11:15 a.m.

In-fighting continues between the International Alliance of Theatrical Stage Employees (IATSE) and members of IATSE Local 720 in Las Vegas, two years after a move by the international to strip the local of its charter and place it into trusteeship.

The New York-based international in April 2002 revoked Local 720's charter, alleging financial misconduct within Local 720 and a "complete breakdown in the democratic processes of the local and its failure to effectively organize and administer its contracts," said a lawsuit filed in November by Robert Trombetta and Dennis Brook, two trustees appointed by the international.

The lawsuit -- one of two highlighting the internal dispute -- names as a defendant Local 720's $130 million pension trust fund.

Local 720 has 1,600 members, but up to 3,000 union members and non-union workers are affected by the plan. The union represents workers on stage shows at 12 unionized casinos, and at several convention service providers and film companies.

The lawsuit alleges that the six trustees of the pension fund made an unauthorized change to the way the trust is designed, soon after the charter was revoked, as a way to bar Trombetta and Brook from appointing and removing trustees of the pension fund. Trombetta and Brook are seeking to remove a member of the trust fund, but are currently unable to because of the change.

"The (fund) trustees amended the trust agreement to perpetuate their own control over the fund and avoid accountability to the local. The trustees did not make such amendment to benefit the plan participants," the lawsuit said.

Brook and Trombetta allege in the lawsuit that under the international's constitution, they have a right to remove officers, "and any other action trustees deem necessary to preserve a local union," the lawsuit said.

Calls to Brook and Trombetta were referred to Lindajo Loftus, a spokeswoman for IATSE, who declined to comment. Attorneys representing the international in both lawsuits could not be reached for comment.

Critics of Trombetta and Brook say the trustees are under orders by the international to take over the fund, but that they don't have the members' best interest at heart.

Recently members have been collecting petitions to protest the lawsuit in front of Local 720's union hall on South Valley View Boulevard. Some members say that under Brook and Trombetta's leadership, members have lost their life insurance benefits and some have lost their health care benefits. They fear if Brook and Trombetta win the ability to appoint who they want as trustees of the pension fund, changes will be made to the fund that don't benefit the members.

"There's a whole lot of issues and a whole lot of problems since the international (took over)," Hal Ritzer, a retired union member, said.

"We don't believe the international's actions are beneficial to the members or their future. When a union is under (a) trusteeship, the trustees have a huge ability to do anything they want without the members' input," Ritzer said.

He said many members are worried about what may happen to the pension fund if the international is able to appoint its own trustees to the fund.

"If it fell under the control of the international, (there's) no telling what may happen. I know these trustees, I don't trust the international. There are about 1,000 others who don't trust them," Ritzer said.

The lawsuit did not specify any allegations of misconduct by the fund's trustees. Adam Segal, an attorney representing the trustees of the fund, said the fund's investments are doing well and that the trustees have decades of experience.

The six-member group of pension fund trustees is made up of three members representing the union and three representing employers. Segal said the fund's trustees were appointed by the union's executive board. The appointments are for indefinite terms.

Fred Davis, Mel Turner and Michael McDonald are trustees representing the union, and Robert Ostrovsky, William Champion and Brian Menzel are employer trustees.

Ostrovsky said McDonald has no relation to the former Las Vegas councilman of the same name.

Trombetta and Brook are actively working to remove McDonald as a trustee, the lawsuit said. They allege that McDonald is not a valid member of the union, the lawsuit said. However, Segal disputed that claim, saying McDonald was involved in a dispute with the union over dues, but he eventually paid them and was reinstated as a member.

The suit asks the judge to order the fund's trustees to allow Trombetta and Brook to appoint and remove fund trustees.

On Thursday, U.S. District Court Judge James Mahan will hear evidence on whether to stay proceedings of the case to allow the defendants a chance to appeal a legal issue to the 9th Circuit Court of Appeals. The fund trustees want to file an appeal in order to obtain a decision on Brook and Trombetta's claims that the trustees violated their fiduciary duty under the Employee Retirement Income Security Act (ERISA) by changing the trust.

Segal said the fiduciary duty under ERISA affects changes made to the pension plan itself and not to the trust that governs the fund.

"They changed (a) rule in the trust, they didn't change the fiduciary plan. The fiduciary rules apply to the plan itself, not the trust," Segal said.

On March 24, Mahan ruled against both sides by refusing to make an immediate decision in the case. In that decision, Mahan denied Trombetta's and Brook's motion for preliminary injunction that would have allowed them to remove McDonald as a trustee. Mahan also denied the fund's motion to dismiss the case by declining to decide whether the fiduciary provision under ERISA apply in this case.

The judge also denied the fund's counter motion for a preliminary injunction barring Brook and Trombetta from removing McDonald as moot.

Michael Urban, an attorney representing several former executive board members in another lawsuit filed in March 2003, said many of the union's members are unhappy with Brook and Trombetta's leadership. In that case, a group of former executive board members hope to overthrow the trusteeship.

He said the international leaders have made changes to the members' vacation pay, to the health insurance contributions made by the employers and have eliminated a preferred life insurance policy, all without consulting members.

"The international has negotiated contracts without input from the members, they have reduced vacation pay, they have sent monies that would have been going to local members to international annuity funds and they have revised contracts so that potential future increases in wages might also go to that annuity fund. They have canceled, without explanation, a life insurance program for members and there have been at least six members who have died with no coverage," Urban said.

Urban said the former executive board members contacted the international to ask for help in dealing with the growing Las Vegas economy in February 2002. He said the international responded by taking over.

The suit was brought by former executive board members -- led by Scot Roper -- against the international; Thomas Short, president of IATSE; Michael Proscia, secretary-treasurer of IATSE; Brook and Trombetta.

The plaintiffs alleged breach of contract, fraud and violations of the Racketeering Influenced and Corrupt Organizations Act (RICO). The RICO allegations have since been dismissed and an amended complaint reflecting that was filed in October.

In the amended complaint the plaintiffs allege that Short, Proscia, Trombetta and Brook fraudulently obtained a letter from officers of Local 720 enabling IATSE to establish the trusteeship. They also allege Short, Proscia, Brook and Trombetta then fraudulently induced officers of Local 720 to transfer the title of the union's property to the international.

The former executive board members allege Short asked for a letter saying the democratic process had broken down in the local union, after the leaders appealed to Short for help in running the union. The plaintiffs claim Short misrepresented to them his reasons for seeking that letter -- and that he then used the letter to force the local into trusteeship.

On March 24, Chief U.S. District Court Judge Howard McKibben granted the defendant's motion to dismiss those fraud claims against Brook, Trombetta and Proscia that stated they had a role in deceiving the former union leaders into handing over ownership of the union's building and deceiving them into admitting in a letter that there was a breakdown in the democratic process.

McKibben declined to dismiss the fraud claim against Short.

In August, McKibben denied a motion for preliminary injunction filed by the former union leaders seeking to overthrow the international's trusteeship. He ruled that no irreparable harm would come to the union under the leadership of the international-appointed trustees.

Urban said the U.S. Department of Labor is conducting an investigation into the way the international leaders handled the move to revoke the union's charter. Tino Serrano, a Labor Department spokesman, would neither confirm nor deny whether an investigation is pending.

Gordon Coker, a now-retired member of Local 720, who joined the union in 1962, said he has lost his life insurance policy after the trustees took over and eliminated the policy. He said many other retirees who have lost that policy have nothing in its place.

He said about six members have died without their survivors reaping the benefits of the policy, which was eliminated in 2002.

Coker said the international took over Local 720 in order to control a local in a lucrative city.

"If you look at this town, it is a cash cow. It is very labor-intensive," Coker said.

He and Urban said Brook and Trombetta have gotten about 300 to 400 new members to join the union since taking over, but haven't gotten more jobs for those members.

"The number of members who pay dues, which go to the international, has increased, but the number of jobs and the amount of money being paid to members has not necessarily increased. Las Vegas is obviously growing at an exponential rate, more hotels, more work, more conventions, which means the possibility of more work for Local 720 members. But it's an enormous amount of work to try to get work with those new hotels and conventions," Urban said.

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