AMO v MEBA

What are the implications of the AMO lawsuit against the MEBA? What if AMO should win?

The Davis Administration would no doubt like the ordinary MEBA Members and Retirees to believe that an AMO win of the lawsuit against the MEBA is well beyond the realm of the remotest possibility.



And indeed if the January 20, 2005 Telex Times is to be believed then, why not? But the important bits that were left out of the TT were the 2 lawsuits that AMO won. It is with this evidence, which has withstood the previous legal tests that the AMO will march into Court.

For MEBA Members to rule out an AMO win is probably not wise.

So let’s look at the liability that the MEBA has in real terms:

First of all, there’s a loss of wages to the Members who crossed over from AMO to the MEBA. Is the MEBA liable? Well, probably not as these people could have all left Interlake in order to stay with AMO. But then those who did leave their jobs, were compensated under the Arbitration which was a result of the AMO win against Interlake.

Then there’s the question of lost dues to AMO. This would be the higher of whatever the AMO dues were or MEBA dues are, minus the cost of representation. Since AMO did and still does have the infrastructure in place to represent these Members, it might have been less costly for AMO to represent the Interlake Members than the MEBA. It is likely that the AMO would be entitled to compensation of the difference between the dues revenue and the incremental representation cost.

Then we get to the Plans.

As far as the Medical Plan goes, AMO lost Employer contributions but at the same time reduced its liabilities. Just what this difference amounts to would have to be determined.

Then there are Employer and Employee contributions to Training and various Pension plans. Again the difference between reductions in contributions against reduced future liabilities would have to be taken into account.

Then there are the legal fees that AMO wishes to recover. Would these include the entire amount AMO has expended in its effort to make good the loss of the Interlake contract?

Presumably the AMO is interested in obtaining these losses for the length of the Interlake-MEBA Contract or ten years. In its article in the Jan 20, 2005 AMO mentions a figure of $60 million, to be followed up by punitive damages. This is probably one of those “lawsuit demands”
In reality it approximates the total value of the contract including pay to Members. Clearly the AMO would not be entitled to that.

But then again, we have to consider that AMO in its lawsuit against Jerry Joseph established a value on its trade secrets. $8 million. Were these secrets really that valuable or even unique? What AMO does is essentially the same as the MEBA. How many different ways are there to run a Maritime Union?

By establishing that the knowledge of one man was worth $8 million, it may be possible to extrapolate that the loss of 100 members for a period of ten years is worth $60 million.

Then all that remains is to hash over the methodology followed by Davis in obtaining the Interlake contract for the punitive award.

So in the worst case how will the MEBA pay for this?

The MEBA Medical Regulations contain provisions that outline the powers given to the Trustees to modify the Plan. (Article 19).

The MEBA Pension regulations have a similar provision.

From the MEBA Pension Regulations (Page 63):

“11.02 Amendment

The Trustees are authorized, in their sole and absolute discretion, to amend or modify these Regulations by resolution duly adopted at any time in accordance with the Trust Agreement, including, but not limited to, any change in benefit amount, types of benefit, and conditions of eligibility and payment. No amendment or modification may reduce any benefits rights or reduce any early retirement benefit or retirement type subsidy or eliminate an optional method of benefit payment with respect to benefits which have accrued prior to amendment, so long as Plan assets are available for payment of such benefits.”

The rules are more limiting than the Medical Plan, but none the less allow benefits to be reduced. That means that a lawsuit settlement against the Pension Plan of a sufficient size could have the effect of reducing pensions. If the funding level were to drop below "fully funded" as a result of a lawsuit payout in the case of the AMO suit were to trigger mandatory employer contributions, the Trustees might act to reduce pension benefits forward.

Perhaps even something like this: prior to (date) pension benefits will accrue at 2-2/3 percent per year, afterwards 1 percent.

The effect of reducing pensions from the date forward would bring the Plan to "fully funded" status without employer contributions.

Members who still hope to obtain their pension may wish to consider such an eventuality.

But there is a way to get AMO to drop the lawsuit.

But then we would have to ask the question: “What’s more important to Davis, his ego or your pension?”

And what would happen to the MEBA-Interlake relationship as a result of an AMO win or withdrawal?

In the end, the biggest effect of this lawsuit could be that if AMO wins, AMO will be able dictate the terms of a merger with MEBA.