Commercial Affiliation

The entire relationship between MESSA and the MEA is premised upon their commercial affiliation. Since MESSA is one of its wholly-owned subsidiary corporations, the MEA is often referred to as MESSA's "parent corporation." In this capacity, the MEA maintains "fiduciary" control over MESSA, meaning that it governs MESSA through a position of trust. For example, MESSA is managed by its own executive director, but this person is hired and supervised by the MEA. Even though MESSA's corporate registration papers reserve such powers to the MEA, the MEA is not restricted by this distribution of authority. As a parent corporation, the MEA has a legal right to exercise absolute control over MESSA.

When considering a relationship similar to the one involving MESSA and the MEA, the United States Supreme Court offered a relevant interpretation of how these parent subsidiary enterprises function:

A parent and its wholly owned subsidiary have a complete unity of interest. Their objectives are common, not disparate; their general corporate actions are guided or determined not by two separate corporate consciousnesses, but one. They are not unlike a multiple team of horses drawing a vehicle under the control of a single driver. With or without a formal 'agreement,' the subsidiary acts for the benefit of the parent, its sole shareholder... They share a common purpose whether or not the parent keeps a tight rein over the subsidiary; the parent may assert full control at any moment if the subsidiary fails to act in the parent's best interests.82

In the case of MESSA and the MEA, both corporations are directed by the will of the MEA for the common purpose of providing benefits and services to the MEA's members.

The reason why the MEA created an insurance subsidiary is best described in MESSA's original Articles of Incorporation. The mission statement of MESSA was explained, in part, as follows:

This Association is organized for the purpose of carrying on business as an insurance agent, including the administering, servicing, and promotion of insurance and working out programs relating thereto of all types and kinds for the benefit of the members of the Michigan Education Association...83

This statement concisely refers to MESSA as an "agent"-an interesting concept in itself if the MEA is the principal-and identifies MESSA's objective as developing insurance benefit programs to the advantage of MEA members. In 1980, MESSA redefined itself as a "voluntary employees' benefits association" (VEBA) and deleted any reference to agency. In order to qualify as a VEBA, MESSA must provide benefits to its members, who must be affiliated through a work-related bond, in this case, the MEA. Nevertheless, the corporate conscience guiding the actions of both organizations belongs to the MEA; hence, MESSA is ostensibly acting on behalf of the MEA. To distinguish between an insurance agent of the MEA and a voluntary employees' benefits association of the MEA is not to suggest that MESSA no longer acts as an agent of the MEA.

The concept of limitations on who can take advantage of MESSA benefits is also essential to MESSA's commercial affiliation with the MEA, because MESSA's membership base is a product of the MEA. In order to receive MESSA benefits, public school employees must be employees of the MEA and its subsidiaries, members of MEA-affiliated bargaining units, administrators employed by MEA-affiliated school districts, or eligible retirees of the public education sector.84 In simplest terms, the MEA must be an active force in a school district before any of the district's employees can be eligible for MESSA coverage

Perhaps the best way to characterize MESSA's commercial affiliation to the MEA is to speak in terms of "dependence." After all, MESSA is dependent on the MEA for its very corporate existence, in addition to the mission and membership base provided through affiliation with the MEA. Along similar lines, MESSA is also dependent on the MEA for authority and governance. The MEA has managed to keep tight reins on MESSA by imposing control on MESSA's operations.