Lawyers, leaders capitalize on railroad workers' injuries
03/26/04 Alison Grant
Plain Dealer Reporter
The racketeering conspiracy at Lakewood-based United Transportation Union has cracked open a window to years of deal-making between lawyers and union leaders over claims brought by injured railroad employees.
Four UTU officials have pleaded guilty in a scheme to collect thousands of dollars from outside lawyers and help cement their power in the nation's largest railroad operating union. In return for paying as much as $30,000 each, the lawyers were put on a list of "designated legal counsels" who handled personal-injury lawsuits for rail workers.
It was a coveted appointment: The 1908 federal law governing liability in such cases permits unlimited damages for rail workers because their jobs are so hazardous and their injuries often so severe: amputations and crushings.
Most injured workers in the United States are covered by workers' compensation, a no-fault system from the New Deal era that assures benefits to employees for work-related injuries. Employers are responsible for the insurance cost.
In contrast, the Federal Employers' Liability Act the rail industry's version of workers' comp is fault-based: Employees must prove the employer is liable at least in part for the injury. Once that bar is cleared, though, FELA has no set menu of damage awards, as workers' comp does, nor does it have a cap on settlements.
Because the law does provide for debate over liability, rail unions found they fared better with a known pool of lawyers, skilled in rail litigation, who could counter sophisticated legal teams from railroads bent on reining in injury settlements.
The UTU's designated legal counsel system developed into a petri dish for abuse, prosecutors say, with lawyers giving money to union leaders to gain access to lucrative injury cases.
UTU officers admitted in court the cash went toward their election campaigns and for personal use.
The cozy deal at UTU had been whispered about for years but never proved. Now, Edward Gallagher, the assistant U.S. attorney in Texas who handled the case, said the case may be only the opening salvo of an investigation. There are 13 rail unions, and many of the same lawyers who were designated counsels for the UTU had similar status with other unions.
How it began
A story published Aug. 6, 1998, in the dusty west Texas town of El Paso was the thread that started the attorney-union scam unraveling.
Victor Bieganowski, a local lawyer, had been accused of insurance bilking, the El Paso Times reported. But it wasn't the fraud charge that piqued Roger Griffeth's curiosity when a phone call to UTU's headquarters alerted him to the story.
Instead, it was Bieganowski's status as a UTU-designated counsel. He had almost no experience in rail cases, the tipster told Griffeth.
Griffeth at the time was UTU general secretary-treasurer - akin to the chief financial officer of a corporation - and running a losing race to replace Charles Little as union president. Cleaning up the designated-counsel system was central to his platform.
Griffeth had heard plenty of gossip during three decades as a railman about attorneys and union officers milking injury cases. As secretary-treasurer, he became aware that designated counsels were writing checks to the union for no apparent reason. Griffeth came to believe attorneys were financing his rival, but he never saw records that pinned down his theory, he told The Plain Dealer recently.
He notified the Department of Labor's inspector general's office in Cleveland about his hunch that Bieganowski had paid Little to become a designated counsel.
The Department of Labor transferred the case to a Southern district and called in the FBI. It crossed the desk of a persistent agent, Cindy Rosenthal. "She bit into it like a dog," Griffeth said, "and never let go."
Rosenthal referred questions about the case to Gallagher, the federal attorney, and Gallagher declined to comment on Griffeth's account. But he said that the former union officer, now retired in Atlanta, "is one of those people pushing reform, and he's been a welcome force."
Charges and changes
The government investigation stretched more than four years as dozens of attorneys worked out deals and testified in Houston.
In September last year, a grand jury indicted Byron Boyd, international president of the UTU until the executive board suspended him this month; the man Boyd had replaced in 2001, Charles Little; and two other union officials.
The four pleaded guilty to labor racketeering conspiracy and agreed to cooperate in a continuing investigation. They face up to 20 years in prison and a $250,000 fine at their sentencing June 10.
Paul Thompson, the UTU's new international president, told a meeting of designated counsels last week that "I would be less than candid if I did not tell you that these charges and guilty pleas are devastating to this organization and have placed a black mark on this union and on the DLC program." Thompson had been assistant president and moved up automatically when Boyd was removed.
The union has announced a new code of ethics that prohibits lawyers from trying to influence union politics and bars union members from soliciting gifts or money from lawyers. To head a new ethics board, UTU's board appointed Joshua Javits, the son of former U.S. Sen. Jacob Javits and a past chairman of the National Mediation Board, a dispute resolution agency for railroads and rail unions.
The UTU's public mea culpa has not quieted questions about the role of lawyers in the transactions.
Thirty-seven lawyers were granted court-ordered immunity to testify about UTU deals. They gave information on 159 incidents of money changing hands.
The lawyers, identified by numbers in the indictments, made up most of the designated counsels working for the UTU between 1995 and 2003. None faces prosecution for payoffs to get access to injured workers, although Gallagher said he would pursue anyone he suspects lied to the grand jury.
"Our focus all along was on the union officers who were abusing their offices," Gallagher said. "The attorneys were witnesses in our case."
The union has not dismissed any designated counsels, although a few have resigned, UTU spokesman Frank Wilner said.
Joseph Weninger, whose Sacramento law firm has designated counsels at 12 rail unions, said he believes the prosecution was politically motivated.
"This is done to paint the unions as corrupt and greedy. They're just an easy target for the Bush administration," he said.
But Weninger said his firm has firsthand knowledge that there was corruption. A union official solicited two partners for money, Weninger said, and they refused.
Image takes a hit
The scandal in Texas is tainting what have long been regarded as some of the most corruption-free, by-the-book unions in the country.
Until this month, no sitting rail union president had ever been removed. The Department of Labor has issued few administrative sanctions against rail unions. Court entanglements have been rarer still.
John McCown, former public relations officer for the Cleveland-based Brotherhood of Locomotive Engineers, fears the Texas trials have injured other rail unions' prestige and power, too.
"If there was trouble that would come in the door," McCown said, "it would be these damn attorneys."
The straight-arrow image came in part from the absence of organized crime that at times has invaded other unions. But Griffeth says a moblike system sprouted at the UTU.
"It's like a mafia," he said. "The attorneys . . . control our union, period. You don't get elected president unless you've got a large amount of attorneys financing your campaign."
Griffeth says union leaders were Masons and kept a lid on the deals by perverting that fraternal organization's creed of secrecy, urging confidantes to "Keep it on the square" - a Masonic vow of silence. Griffeth once belonged to the Masons but dropped out when he saw their grip on the union, he said.
Wilner had no comment on Griffeth's description of former UTU leaders. He said the union's focus is on righting the damage done by a few officers.
In the wake of the UTU case, rail unions are bracing for renewed attempts to modify or throw out the FELA law that covers injured workers. But they insist the law is good today for the same reason it was good at the turn of the century - giving employers a strong incentive to make railroads a safe place to work.
To reach this Plain Dealer reporter:
agrant@plaind.com, 216-999-4758
9:11:53 AM 
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