ULLILCO Kicks off Internal Inquiry

May 6, 2002 (PLANSPONSOR.com) - Already under investigation by the US Department of Labor (DoL) for its handling of union pension money, ULLICO Inc. will now also be the target of an internal mismanagement and insider trading probe.

The board of the union-owned ULLICO tapped former Illinois governor James Thompson to lead the investigation of the company’s investment in Global Crossing Ltd., as well as into insider trading allegations, according to a BNA news report.

Although the union company had no official comment, BNA quoted an unnamed source as saying that the ULLICO board set no deadline for the Thompson probe. Thompson is also expected to operate without board restrictions, the BNA report said.

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ULLICO, formerly known as Union Labor Life Insurance Company, which was founded in 1925 to provide affordable life insurance for workers, also invests and manages approximately $6 billion of largely building trade union pension fund assets.

Insider Trading Charges

Allegations that some members of the board personally profited from the sale of ULLICO stock as a result of insider trading surfaced last month during a federal grand jury investigation of Jake West, former president of the Bridge, Structural and Ornamental Iron Workers.

West, who was elected to ULLICO’s board in 1990, was indicted last year for allegedly embezzling union funds and filing false reports with the Labor Department.

At the same time, the value of ULLICO’s investment of union pension funds, which were heavily invested in Global Crossing, dropped when the price for Global Crossing shares plummeted.

In March, John Sweeney, president of the AFL-CIO and a member of ULLICO’s board, sent a letter to Robert Georgine, chairman of the company, urging a prompt review of the matter and proposed criteria for members of the review panel.

Georgine acknowledged Sweeney’s letter but said he would be taking a “somewhat different” approach. Georgine also said he expected ULLICO’s board to be vindicated in the investigation.

Global Crossing, a former high-flying telecommunications network builder, filed for bankruptcy in January. Its insolvency was the fourth largest public company bankruptcy in terms of assets ($22.4 billion), according to BankruptcyData.com.

Ca. Court Ruling Boosts Employers' Sex Harassment Defenses

April 18, 2001 (PLANSPONSOR.com) - California courts' practice of holding employers strictly liable for supervisor sexual harassment has been called into question by a recent 9th U.S. Circuit Court of Appeals ruling.

The court ruled last week that a woman whose sexual harassment claim was thrown out under federal law — because she did not use her company’s policies to deal with harassment claims before she sued — cannot pursue her claims under state law for the same reason.

The ruling “is going to do away with strict liability in California. And that is clearly a major defeat for employees,” said plaintiff’s attorney Mark Rudy.

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“Reasonable Care” Defense

In upholding a federal district court decision to throw out the woman’s state claims, 9th Circuit Judge Arthur Alarcon said that employers are allowed the same defense against harassment suits under California’s Fair Employment and Housing Act as they receive under federal Title VII of the Civil Rights Act of 1964.

In so doing, Alarcon ruled that previous California Court of Appeal opinions holding employers “strictly liable” for supervisor harassment did not preclude the defense established by the U.S. Supreme Court in two 1998 decisions.

The Supreme Court ruled in those cases that employers can avoid liability by showing that they exercised “all reasonable care” to prevent and correct the harassment, and that the employee did not take advantage of preventive or corrective company policies.

Faced with predicting how the California Supreme Court would decide the issue, Alarcon explained:

  • That California courts have consistently looked to Title VII for guidance in interpreting FEHA.
  • That the two statutes had the same legislative intent.
  • FEHA’s requirement that employers “take all reasonable steps to prevent harassment” is similar to the first test of an affirmative defense.

Attorney Richard Rahm, who represents management in employment disputes, said the 9th Circuit was looking at public policy. The judges “want to encourage employers to have a strong anti-sexual harassment policy, ” Rahm said.

– Fred Schneyer                                                       editors@plansponsor.com

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