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Saunders v. Hankerson

October 5, 2005

NATHAN A. SAUNDERS II, PLAINTIFF,
v.
ESTHER HANKERSON ET AL., DEFENDANTS.



NOTICE OF PROPOSED RESOLUTION OF NATHAN SAUNDERS II'S DERIVATIVE ACTION

TO: MEMBERS OF THE WASHINGTON TEACHERS' UNION

PLEASE READ THIS NOTICE CAREFULLY AS THE RESOLUTION DESCRIBED BELOW AFFECTS THE WASHINGTON TEACHERS' UNION

This Notice has been sent to you pursuant to Rule 23.1 of the Federal Rules of Civil Procedure and an Order of the United States District Court for the District of Columbia (the "Court"). The purpose of this Notice is to inform you of the proposed resolution of the lawsuit brought by derivative Plaintiff, Nathan Saunders II against the American Federation of Teachers, AFL-CIO ("AFT") and others. The AFT is the national affiliate of the Washington Teachers' Union ("WTU"). This Notice also serves to inform you of the hearing to be held by the Court to consider the fairness, reasonableness, and adequacy of the resolution.

This Notice is not an expression of any opinion by the Court about the merits of any of the claims or defenses asserted by any party in this litigation or the fairness or adequacy of the proposed resolution.

MR. SAUNDERS'S LAWSUIT

Mr. Saunders's lawsuit arises from the alleged embezzlement of approximately five million dollars in union funds by former officials of the WTU. The individuals directly involved in the alleged wrongdoing were indicted and processed through the criminal justice system.

Nathan Saunders filed a derivative lawsuit against the former Executive Board of the WTU, the WTU's former Board of Trustees, the American Federation of Teachers, AFL-CIO ("AFT"), The Independence Federal Savings Bank and other individuals for either being directly involved in the alleged embezzlement, for aiding in the embezzlement, or for failing to identify the fraudulent activity and put a stop to it. Mr. Saunders's lawsuit was derivative in nature. He sought monetary and injunctive relief on behalf of the WTU as an institution -- not for himself or for individual members of the Union. In particular, Mr. Saunders alleged violations of the Labor-Management Reporting and Disclosure Act, the Labor-Management Relations Act, and the Racketeer Influenced and Corrupt Organizations Act.*fn1

THE PROPOSED RESOLUTION

Under the Proposed Resolution,

1. The WTU and the AFT will, under the lawsuit filed by the AFT, jointly pursue the recovery of money from those who embezzled and absconded with millions of dollars in funds from the WTU and those individuals and entities that aided and abetted or facilitated the embezzlement of funds from the WTU between 1995 and 2002; and

2. Any and all of the money that the AFT and the WTU recover from the individuals and entities that either embezzled the union funds or facilitated in the embezzlement of the funds will be allocated entirely to the WTU treasury; and

3. Bryan Cave LLP will serve as lead co-counsel in the foregoing lawsuit and the AFT will pay all of its fees and expenses; and

4. Hall Estill will serve as co-counsel in the foregoing lawsuit. The AFT will reimburse Hall Estill for up to $12,500 in documented expenses (excluding legal fees) incurred in pursuing the lawsuit. The WTU will pay Hall Estill's legal fees and all expenses exceeding $12,500 (which represents the amount the AFT has agreed to reimburse Hall Estill); and

5. The AFT will provide $171,254, to pay for the WTU's portion of the costs associated with the services of Thought Bridge, which the WTU retained while it was under the AFT's Administratorship to assist in negotiations with the Washington, DC ...


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