National Mediation Board document show Republican presidential candidate Mitt Romney may have been involved in an unlawful campaign to suppress a potential union in the mid-1980s. The complaint leveled by Key Airline Pilots Association was filed on October 15, 1985 under Case No. R-5597. The complaint specifically argued against Key Airlines a company controlled and ran by Bain Capital according to court documents.
Key Airlines, an early investment for the private equity firm founded by a young Mitt Romney and two associates, broke the law by attempting to coerce and then dismiss two pilots who tried to organize a union. Two months after a union vote failed, Bain agreed to sell Key Airlines at a large profit.
“The anti-union activities in this case are not merely unfair labor practices as Key argues, but blatant, grievous, willful, deliberate and repeated violations of the Railway Labor Act,” Roger Foley, federal judge for the District of Nevada, wrote in 1992, in a case brought by two Key pilots.
The case illustrates an episode in Romney’s business career and raises questions about how it has prepared him to manage the US economy.
Key Airlines was a small charter carrier with a military contract to ferry personnel to bases in the Nevada desert. The union effort was suppressed under Bain’s ownership in 1985 and 1986 although a court judgment against the company and its management – including Bain Capital founding partner T Coleman Andrews III – did not come until 1992. The judgment was later qualified by a subsequent court ruling in 1994, together with an agreement to settle an appeal.
According to regulatory filings, Romney was a director of Key Airlines and had a personal shareholding in the airline. Neither Romney nor Bain Capital were named or cited in the federal court ruling in Nevada.
Mr Romney’s campaign referred to a statement on its website supporting the right of workers to join – or not join – a union: “To exercise that right freely, workers must have access to all the relevant facts they need to make an informed decision. This means hearing from both the union about the potential benefits and from management about potential costs.”
“Despite unemployment over 8 per cent for more than three years, President Obama continues to put the interests of labor bosses ahead of the interests of Americans looking for work,” added Michele Davis, a spokeswoman for the campaign. “By contrast, Governor Romney has grown companies and created jobs, in the private sector and as Governor of Massachusetts, and will get America working again.”
Key Airlines was initially acquired in 1983 by investors including partners of the Bain & Company management consultancy. When Bain Capital was set up in 1984, according to a prospectus aimed at marketing funds managed by Bain, one of its first investments was a $2m injection into Key.
In the autumn of 1985, 21 pilots at Key planned to form their own union, citing safety concerns. Management said that the campaign was actually motivated by low pay.
According to the court ruling, Key held coercive meetings with pilots; said management would leave and the company lost contracts; and told pilots that salaries, bonuses and benefits could be frozen. Federal labor law forbids an airline “to interfere in any way with the organization of its employees”.
Two union organizers – Olen Rae Goodwin and Lawrence Schlang, a former naval aviator – were instructed to sign resignation letters, according to a separate report by the National Mediation Board, which oversees union elections in the sector. The report described the company’s excuse for this dismissal as “little more than pretext”. When a union election was finally held only two pilots voted “yes”.
The information it potentially damaging for the Romney as he attempt to claim in his campaign that as a result of his experience in the private sector he is by far more experienced than Obama when it comes to creating jobs.