MTA Uproar At High Fee to TWU Arbiter, Union Fund Donation

JOHN ZUCCOTTI: Controversy over fee, donation. A new controversy regarding the Transport Workers Union Local 100 contract award arose last week after it was revealed that the arbitrator who issued the decision submitted a bill for $400,000 and asked that his $115,000 fee be given to Local 100’s Widows and Orphans Fund.

The cost of the arbitration—which will be split by the Metropolitan Transportation Authority and Local 100—far exceeds the $34,000 billed by George Nicolau, who issued a contract award in late 2006 that virtually replicated a deal reached a year earlier—following a three-day transit strike—that had been narrowly rejected by Local 100’s rank and file.

More Work Done This Time

One official familiar with the two arbitrations pointed out, however, that since there had been a strike and a mediated settlement on a tentative contract prior to the 2006 arbitration, Mr. Nicolau did not have to hold the kind of detailed informational hearings that panel chairman John Zuccotti conducted this time.

JAY WALDER: Counsel reviewing arrangement. The Daily News reported that MTA board members, none of whom it identified by name, were angered by the amount of the bill submitted by Mr. Zuccotti, a former Deputy Mayor during the mid-1970s who has long served as an MTA arbitrator. Other officials questioned whether the fact that Mr. Zuccotti was donating his fee —the remainder of the bill covers payments to members of his law firm who worked on the arbitration—to a union charity indicated a bias in Local 100’s favor.

A union attorney speaking conditioned on anonymity questioned whether the donation to the fund could run afoul of Federal labor law because it was agreed to by the head of the union at the time, Roger Toussaint, in his capacity as Local 100’s representative on the three-man arbitration panel.

LEE SANDER: Being second guessed retroactively. A spokesman for Mr. Zuccotti, Lloyd Kaplan, noted that the-then Chief Executive Officer of the MTA, Elliot Sander, had consented to the high hourly rate prior to the beginning of the arbitration, as well as to Mr. Zuccotti’s decision to donate the portion of it that was his fee to the TWU fund.

“If the MTA no longer wishes to contribute the fee for Mr. Zuccotti’s many hours of work to the widows and children’s fund, that’s their decision,” Mr. Kaplan said.

Objected to Pact’s Cost

The MTA was already appealing Mr. Zuccotti’s award, which granted 11-percent in raises over three years and reduced union members’ healthbenefit payments, calling it excessive given the current economic climate and the agency’s ability to pay. Mr. Zuccotti had noted that the 4-percent raises he granted during the first two years of the pact were consistent with what Mayor Bloomberg negotiated with several city unions for an overlapping time period and more recently granted to managerial employees. He also contended in the decision that the MTA had additional resources it could tap if necessary to avert a fare increase to afford the raises, including Federal stimulus funds.

ALAN R. VIANI: Award less shocking than appeal. Asked whether the MTA and its new Chairman and CEO, Jay Walder, believed there was anything improper about Mr. Zuccotti donating his fee to the union fund, an agency spokesman said, “The Chairman has asked the MTA General Counsel to review the donation.” He declined further comment on the matter.

Veteran labor officials described the rate as unusually high, and also noted that most arbitrators set a daily rate for their services rather than charging by the hour.

Gene Russianoff, who heads the rider advocacy group known as the Straphangers Campaign, said, “It’s incredible we don’t learn about these things until way late in the process. If Jay Walder is serious about transparency, he’s going to have to find some way to let us know in a timely way about these contracts.”

A Matter of Appearances?

One management official, who spoke conditioned on anonymity, contended that Mr. Zuccotti’s donating his fee to the union fund raised questions about his impartiality, even if he derived no benefit from doing so. Mr. Zuccotti, who as a Deputy Mayor during the Beame administration was lauded for his work in helping extricate the city from the mid-1970s fiscal crisis, has served as a transit arbitrator for more than two decades while also carving out a lucrative law practice.

“You always have to avoid the appearance of impropriety even if there is no impropriety,” said this official.

But another official countered by asking rhetorically, “Do you have any kind of feelings toward the widows and children of those who are killed in the line of work? Does that vitiate your ability to render an unbiased decision?”

Others with extensive involvement in both transit and arbitration matters said that they saw nothing wrong with Mr. Zuccotti’s gesture.

“I don’t see what the conflict of interest is,” said Joshua Freeman, a City University of New York professor who wrote a book about the history of Local 100. “It seems very admirable that he has sympathy for the families of New York public workers who have died on the job. I’m surprised that the MTA would think it’s partisan.”

That view was shared by Alan R. Viani, a veteran arbitrator who served as one of the mediators who helped produce a Local 100 contract in the wake of the December 2005 transit strike.

“It’s a reputable charitable organization,” he said of the Widows and Orphans Fund, which was established eight years ago by Mr. Toussaint and includes an education fund for the children of workers who die on the job in addition to other economic assistance to family members.

But he noted that the hourly rate was unusual, saying that like most in the profession he charges a daily fee, and some arbitrators handling major cases would set a flat fee that generally would not increase if the proceedings went longer than expected.

Says Appeal Raises More Questions

On the other hand, Mr. Viani questioned the MTA’s decision to appeal Mr. Zuccotti’s award, as well as the criticism of it by Mayor Bloomberg and newspaper editorial writers.

Mr. Bloomberg was said to have torpedoed a deal Mr. Sander was on the verge of making with Mr. Toussaint last October that reportedly would have granted three 4-percent raises. There has been widespread speculation that Mr. Sander, prior to leaving the MTA in May, indicated to Mr. Zuccotti that he believed it could afford a slightly reduced package along the lines of what was actually awarded in August. (Mr. Sander last week declined comment on all matters pertaining to the arbitration.)

“The reality is that a deal was made at the table, and when that happens, it’s not a surprising outcome,” Mr. Viani said of the final award. “Arbitrators don’t make revolutions, they don’t try to upset apple carts once something is pretty much in place.”

And, he noted, in the uproar over the strike four years ago, “One of the common complaints was, why didn’t they go to arbitration? The Mayor and the MTA both said that. But when they go to arbitration, now it’s okay to go to court and challenge the arbitrator’s award?”

Mr. Viani continued, “There’s a flaw to that thinking. There’s a basic hypocrisy.”