CMG's Kitchen Resigns After Alleged Labor Law Violation

Register now

In a move that shocked the credit union world last week, the board of CUNA Mutual Insurance Group forced company president and CEO Michael Kitchen, one of the most popular figures in the credit union movement, to resign after they discovered he may have violated federal labor laws during the long-stalled union contract negotiations.

During an emergency meeting held on a Sunday, the CMG board asked Kitchen to resign after he told them he had offered his own money to a group of employees who are seeking to break-away or even decertify the company's union, the local 39 of the Office and Professional Employees International Union. Even though the funds were rejected, the offer could violate the National Labor Relations Act, which strictly forbids such management interference in the collective bargaining process.

"CUNA Mutual Group's employees have the right to make their own decisions concerning bargaining and union issues, even when different employee groups may not agree," said Loretta Burd, chairman of the CMG Board, and president of Centra CU, Columbus, Ind.

OPEIU had initially indicated it would file a civil complaint with the NLRB and ask federal authorities to bring criminal charges in the case. But it later said it would not be doing so. "There is a provision in labor law that makes it a criminal offense to give money or anything of value to any employee involved in a labor matter," asserted Kurt Kobelt, a Madison attorney representing the local 39 of the OPEIU.

Kobelt told The Credit Union Journal the union has filed an unfair labor practice charge against CUNA Mutual for the incident in which Kitchen admitted to offering $1,000 to an employee group to help them hire a well-known firm that helped in the decertification of the union at CUNA CU two years ago. "In our view, this is a violation of the criminal statute," said Kobelt.

While civil remedies brought under the National Labor Relations Act would be minor and would affect the company, a criminal action would have been more severe and couldhave been brought against Kitchen personally, Kobelt said. Officials at the U.S. Attorney's office in Madison, which was contacted by the union, would not comment on the case.

The board quickly named CUNA Mutual's chief financial officer, Jeffrey Holley, to serve as acting CEO until a permanent replacement for Kitchen is hired.

Kitchen, who is widely credited with building CUNA Mutual into a ubiquitous and indispensable service provider for credit unions during his nine years as chief executive, was shaken by his quick dismissal.

"I was never trying to do anything wrong," he said of his firing. "The incident which has led to my retirement was unfortunate, but frankly, the response was far in excess of what occurred. My only thoughts were for my employees and their concerns. I thought then and now that they should receive counsel from knowledgeable people. My role was simply to help them achieve that, and I never suggested any particular course of action to them, nor would I."

But the incident raises the possibility of legal action by federal labor authorities, as well as suggestions of management support for the possibility of union-busting at CUNA Mutual, which has had difficult negotiations with the OPEIU in the past, as well as since the March 31 expiration of its most recent contract.

The $1,000 that Kitchen offered to the group of employees was to be used to hire the Madison law firm of Michael Best & Friedrich LLP, which represented CUNA CU during a successful employee drive to decertify the same union in November 2002. Though the group declined Kitchen's offer of financial assistance, it did go out and hire the firm, which touts its success in helping bust the CUNA CU union, and the lawyer who represented the credit union during the decertification, Tom Godar.

Kitchen insisted last week that his offer of financial assistance was not meant to aid such an effort. "I never tried to bust the union, OK," he stressed.

The group seeking to break-away from the union has been frustrated over the failure of the OPEIU to come to an agreement with management. Dennis Krull, an IT worker at CUNA Mutual, said he is part of the group that is exploring numerous options, including forming a separate group for "professional" workers at the company within the OPEIU; forming a completely separate union for those workers; or decertifying the current union, which is what happened at CUNA Credit Union. "We're not looking at decertification right now, but that is an option," said Krull.

Options Are Outlined

Internal CUNA Mutual e-mails and the group's own website spell out the options and discuss such issues as whether dissatisfied employees may withhold their union dues and whether employees can move to eliminate the union from CUNA Mutual.

Union officials were confused by the Kitchen ouster. John Peterson, chief negotiator for the OPIEU, said he was puzzled by Kitchen's apparent support for the group because it was Kitchen who interrupted his vacation two months ago to arrange a personal meeting with OPEIU President Michael Goodwin to try and get negotiations moving again. "It's confusing, to say the least," said Peterson, adding that the growing interest in forming a separate bargaining unit has provided an obstacle to the bargaining process.

The union has filed unfair labor charges against CUNA Mutual for the company's apparent support of the employees group, and because the group was allowed to use the company's e-mail system and website to publicize its efforts. However, a company representative said they discontinued the use of company resources once the company became aware of them.

Union officials have not decided whether to file new charges over the Kitchen incident, Peterson said.

Six Months Without Contract

The OPEIU, which represents 1,400 of CUNA Mutual's 2,600 Madison employees, has been negotiating on a new contract for almost six months. The union represents more than a dozen credit unions, as well as workers at CUNA's Madison offices.

Kitchen, 59, was hired to head CUNA Mutual in 1995, after serving three years with the company's Canadian affiliate. During that time he helped more than double CUNA Mutual's assets under management to $12 billion and expanded the company's efforts in a variety of areas, including mortgage lending, securities brokerage, an Internet services, all through credit unions, all the while insisting the company would never stray from its exclusive credit union market.

For reprint and licensing requests for this article, click here.