The Issue of Agency

The debate over whether or not MESSA is an "agent" of the MEA merits special attention. Because it is a public employee union, the Michigan Education Association is supposedly regulated by the Public Employment Relations Act (PERA) of 1947, although it has little regard for this Act.100 PERA was designed to govern the conduct of public sector labor unions in regards to strikes, workers' rights, bargaining duties, and contract negotiations. The practice of a public employee union establishing subsidiary corporations was not explicitly addressed in PERA or related legislation. As a result, a complicated legal question has arisen as to whether or not a union's subsidiaries are also regulated by PERA. This question is now being considered in the case of IEA/MEA and MESSA v. St. Clair Intermediate School District, which is pending before the Michigan Court of Appeals. Specifically, the issue at stake is whether MESSA is an agent of the MEA and therefore subject to the same regulations as the MEA.

Before any unfair labor practice charge can be brought against MESSA, the law must ascertain that MESSA is the agent of a labor organization-the MEA. Otherwise, MESSA is not subject to the jurisdiction of PERA. Due to the significant marketing role that MESSA has in the collective bargaining process, it was inevitable that an unfair labor practice charge would arise, as demonstrated in the aforementioned case. In that particular case, MESSA unilaterally increased the lifetime maximum benefit of its insurance plans without consulting its customer school districts. Under the changed system, MESSA members could receive up to $2 million in lifetime benefits rather than the previous $1 million limit.

The St. Clair Intermediate School District contends that MESSA has an obligation to negotiate such changes with school districts, because MESSA is the agent of a labor union. MESSA, on the other hand, contends that while it is owned by the MEA, it conducts business independently of the MEA. Based upon the "synonymy" between the organizations, the symbiotic relationship between the officers, and the degree of control exercised by the MEA, the administrative law judge established that MESSA is an agent of the MEA, subject to control by the MEA.101 The first appeal of the case affirmed this finding of fact.

The law of agency is based upon common law principles of control. Before the Court of Appeals can rule that MESSA is an agent of the MEA, it must determine that the MEA has the ability to control MESSA, that MESSA has the authority to act for the MEA, and that there is a definitive relationship between these organizations.102 In requesting the appeal, MESSA argued that "corporate control does not mean that the controlled entity acts as an agent of the parent entity for all purposes."103

The forthcoming decision from the Court of Appeals will set a precedent for future judgments relating to MESSA. If the decision is upheld that MESSA is an agent of the MEA, it will clear the way for current and future unfair labor practice charges which are brought against MESSA. However, if this decision is reversed, the consequences would be devastating to public school districts which contend that MESSA has violated their rights as parties to an agreement. MESSA would be given the means to alter its insurance agreements without the consent of school districts, since it will have no duty to bargain with school districts once a labor contract has been signed. If MESSA loses the case, however, it would mean that the MEA is legally liable for the actions of MESSA, which contradicts one purpose of having corporate subsidiaries-to spread risk and limit the liability of the parent corporation. Either way, the results will be a serious blow to the losing party.