War! King/Snohomish Master Builders sue BIAW for breach of fiduciary duty
The Master Builders Association of King and Snohomish Counties (MBA) today filed a lawsuit in Thurston County Superior Court against the Building Industry Association of Washington (BIAW) for breach of fiduciary duty, unfair competition under Washington’s Consumer Protection Act, breach of contract, declaratory judgment and other actions related to BIAW’s management of the Return on Industrial Insurance Program (ROII). The MBA filed the complaint on behalf of the association and its members who participate in BIAW’s ROII program.That's from a Master Builders news release sent to NPI.
Regular readers are undoubtedly familiar with the BIAW and its long history of attempting to influence elections in Washington State.
The BIAW spent millions trying to unsuccessfully install Dino Rossi in the governor's mansion, twice. It's behind this year's Initiative 1082, which is intended to destroy our publicly administered industrial insurance system, which protects workers who get injured while on the job. It has previously sponsored ballot measures to kill new ergonomics rules (Initiative 841) and undo improvements to our unemployment insurance law (Referendum 53).
The BIAW's electioneering war chest is ironically derived from the insurance pool it operates. Washington law requires that Evergreen State employers carry industrial insurance, to take care of workers who get injured on the job (in return, employers cannot be held liable for workplace injuries and illnesses.)
The BIAW wants to tear this system — which has served us well for many decades — apart. They're so greedy that they think they can profit even more by privatizing industrial insurance. This is what Initiative 1082 is all about.
But in the meantime, they continue to profit from the current system (as they have for years), by exploiting a loophole in the retrospective rating (a.k.a. ROII) program, commonly known as retro.
Retro was created by the Legislature many years ago, and is overseen by the Department of Labor & Industries. It allows employers to get back some of the money they put up for industrial insurance if they had a safe year.
Businesses are allowed to participate in the program individually, but most join pools, to share and minimize their risk. The BIAW happens to operate the largest and most successful pool in the state, serving builders. But instead of distributing one hundred percent of the refunds it gets back to its members, however, BIAW keeps a certain percentage to use for electioneering.
It's a perfect example of greed. The BIAW is exploiting a progressive idea to achieve destructive right wing ends. The whole point of retro is to provide an incentive for worker safety, and reward businesses that make worker protection a high priority. The BIAW is manipulating the system and cheating its members.
Regrettably, efforts to put an end to this abuse have never gone anywhere. Nevertheless, retro reform continues to be one of NPI's legislative priorities.
In 2009, the state Senate passed a bill which would have had the effect of forcing the BIAW to ask permission and stop withholding a portion of the retro refunds from its members. Unfortunately, the House did not pass the legislation.
Recently, however, the BIAW's largest local chapter, long uneasy over the way the BIAW has run its retro pool, took matters into its own hands and re-formed its own pool, called GRIP (Group Retrospective Insurance Program).
The Master Builders allege (PDF) that BIAW retaliated almost immediately after they announced that they were creating GRIP earlier this year:
On February 12, 2010, at the direction of Defendant [Tom] McCabe, Tom Kwieciak, BIAW's Administrator of Insurance Programs, wrote to the local association Presidents and Executive Officers and made the following threats:The Trust Declaration is an agreement which dates from 1994, made between the BIAW and its locals. The Declaration basically sets out how much money the locals get from the retro pool operated by the BIAW.Local associations that choose to participate, cooperate and/or market MBA's Plan (or any other competing group retrospective rating program) will not be permitted to participate in any BIAW marketing activities (including BIAW's EOC marketing meetings), nor will they be privy to weekly ROII marketing/enrollment reports and/or information that BIAW has forwarded to the local associations in the past.This memorandum ended with a "Non-Compete Agreement" that the chief executives of each of the locals were required to sign as a condition to receiving Marketing Assistance Fees mandated under the Trust Declaration.
In the future, any local association participating, cooperating, and/or marketing MBA's plan (or any other competing group retrospective rating program) will not receive Marketing Assistance Fees from BIAW.
The Master Builders refused to sign BIAW's non-compete agreement. Thus, in June 2010, BIAW began to withhold MAF from the Master Builders, while paying the required full 10% to all other local associations, except Master Builders Association of Pierce County (which also refused to sign), pursuant to the Trust and Participation Agreement terms.
The Master Builders are contending that the BIAW is withholding funds that are owed to them under the agreement. Consequently, they are suing the BIAW to get their money because asking nicely didn't work. (Gee, wonder why?)
The Master Builders are asking the Court for the following:
- For a judgment against BIAW, BIAW's officers, Defendant McCave, and the Trustees, jointly and severally, for damages in an amount to be proven at trial;
- For a declaration that BIAW's, BIAW's officers', Defendant McCabe's and the Trustee's actions violate the Trust Declaration and Participation Agreements,
- For injunctive relief requiring BIAW, BIAW's officers and Defendant McCabe to cause the Trustees, and requiring the Trustees, to comply with the Trust Declaration in accordance with the Court's declatory judgment, and to desist from distributing any funds due and owing to the Master Builders to any third parties;
- For appointment of a Custodial Receiver of the WBBT assets including all payment due and owing to the Master Builders, and all proceeds related thereto, regardless of location or form;
- That the Court order Defendants to deliver and deposit proceeds in controversy in this action to the Thurston County Superior Court Registry;
- For an award of the Master Builders' costs and attorneys' fees against BIAW, BIAW's officers including Defendant McCabe and Trustees, jointly and severally, under inter alia, RCW 11.96A.150, and RCW 19.86, et seq,;
- For such other and further relief as this Court deems just and equitable.
Actually, infuriated is probably an understatement.
But they brought this upon themselves through their unethical and deplorable conduct. As we've long suspected, Tom McCabe and his buddies aren't merely unyielding ideologues or political hacks. They're crooks.
The complaint makes that plainly clear.
The Master Builders wouldn't be bringing this lawsuit if there wasn't any merit to their accusations. They've been wronged and they naturally want justice.
What they may not realize is that they are doing all of us a favor. By filing suit against the BIAW, they are helping to expose more of the BIAW's corrupt dealings. As Justice Louis Brandeis once said, sunlight is the best of disinfectants.
We'll be following this case with interest. Expect to see follow-up posts here on The Advocate when there are further developments.