Court Minutes

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146JUSAM Motions
1 UNITED STATES DISTRICT COURT
1 SOUTHERN DISTRICT OF NEW YORK
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3 UNITED STATES OF AMERICA,
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4 Plaintiff,
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5 v. 90 Civ. 5722 RMB
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6 DISTRICT COUNCIL, et al.,
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7 Defendants.
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11 April 6, 2011
11 11:00 a.m.
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15 Before:
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16 HON. RICHARD M. BERMAN,
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17 District Judge
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SOUTHERN DISTRICT REPORTERS, P.C.
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146JUSAM Motions
1 (In open court)
2 (Case called)
3 THE COURT: Good morning, everybody. It looks like
4 this is going to turn out to be a status conference. There is
5 one overarching issue which does not appear to be too much
6 dissent, if any, about which is a time-frame and a structure
7 for a proposed elections. There are some subsidiary issues. I
8 don't know if there is any opposition. There is an application
9 for intervention, and people want to be heard about that. I am
10 happy to hear about that, too.
11 There was also when we were last together some
12 discussion about proposed new bylaws that the union was going
13 to or is going to or maybe has submitted in the first instance
14 to the review officer. I don't know if that has occurred or
15 what the status of that is.
16 Those are pretty much over all the issues and then
17 there is some individuals who have written who I assume are in
18 the audience and they wish to be heard on some or all of these
19 issues. I thought maybe I would ask Judge Conboy, maybe if you
20 would bring us up to date from your perspective where things
21 tan.
22 JUDGE CONBOY: Good morning, your Honor. I want to at
23 the outset introduce my colleagues. William Reckler is a
24 colleague of mine at Latham & Watkins, and Raymond McGuire is
25 the new counsel for the Board of Trustees at the funds.
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1 Your Honor, I, first of all, want to say a few things
2 about the issue of union democracy which was obviously the
3 central point of discussion last time. The UBC has decided to
4 take off the table the proposal of indirect election of
5 officers by the delegates. We have focused our attention on
6 the broader question of empowerment of the delegate body to
7 create an adequate checks and balances structure as against the
8 elected officers.
9 In light of the distressing history of excessive and
10 ultimately illegal control by the elected officers, we have
11 focused in the interim since February 8th on developing a
12 series of revised bylaws that will, we hope, in accordance with
13 the express wish of the United States Attorney, we hope that
14 these bylaws will create an effective check and balance system
15 to what has been an autocratic rule at Hudson Street which, of
16 course, has led to twice now necessary intervention of federal
17 grand juries and the United States Prosecutor with respect to
18 extraordinarily serious crimes that have undermined the
19 integrity and the credibility of the union as a whole and have
20 damaged individually every single member of the rank and file
21 of this union.
22 I am pleased to say that after a great deal of
23 discussion with the government and with the reserve officer,
24 that we were yesterday able to hand to the United States
25 Attorney and to the review officer a formal draft of the
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1 election -- indeed, beyond the election -- the broad
2 organizational structure of the District Council in accordance
3 with this proposed reconfiguration.
4 I also would like to say, Judge, that we have
5 committed to Dennis Walsh, the review officer, to provide to
6 him well in advance the beginning of the election cycle which
7 we are agreed with Mr. Walsh should begin on August 15th, with
8 an eye to having elections on December 15th. We have committed
9 to Mr. Walsh that any structural reconfiguration of locals or
10 other components in the District Council will be communicated
11 to Mr. Walsh and to the U.S. Attorney well in advance of that
12 August 15th step-off point with respect to development and
13 promulgation of rules for the election.
14 So on the point of union democracy, we are satisfied
15 that the direct-indirect discussion about who should elect the
16 District Council officers is, in our view, secondary. We had,
17 prior to the indictment of and conviction of Mr. Divine, we had
18 indirect elections and we had direct elections prior to the
19 indictment and conviction of Mr. Ford.
20 It is very apparent to us that the much more critical
21 question is how do we empower this delegate body to have an
22 effective and executive role at Hudson Street as opposed to a
23 passive and ultimately marginal role.
24 THE COURT: I know this could be a naive question, but
25 just trying to understand how this works, you have elections in
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1 the past, and in each instance or in several instances it
2 resulted in the election of people who were ultimately
3 convicted of crimes, right?
4 So you're saying now that in the new bylaws and
5 probably in election procedures, but there is a new structure
6 that hopefully surrounds a new election on or about December 15
7 of this year which will lead to a different outcome?
8 JUDGE CONBOY: Hopefully.
9 THE COURT: How, just so the laymen can understand,
10 what changes are you making or proposing that would give rise
11 to a better outcome of union governance and union democracy?
12 JUDGE CONBOY: Let me just suggest, Judge, because the
13 United States Attorney and the reserve and review officer have
14 not had an opportunity to comment --
15 THE COURT: Right.
16 JUDGE CONBOY: -- let me just --
17 THE COURT: You say it is in draft form?
18 JUDGE CONBOY: General concept.
19 THE COURT: That is what I would like to hear.
20 JUDGE CONBOY: Let me just insert the word "perhaps"
21 in front of each of these because we are obviously totally
22 committed to accommodating any suggestions that the government
23 and the review officer make and ultimately, of course, any
24 reactions that you will have because ultimately these will be
25 submitted to you.
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1 Perhaps delegates should have final authority, final
2 authority on budget, expenditures, the overall organizing plan,
3 collective bargaining and contracts.
4 Perhaps the delegates should have the authority to
5 review, approve, reject, hire, discipline and fire business
6 agents, shop stewards, organizers and counsel representatives.
7 Perhaps delegates should have the sole authority to
8 hire, evaluate and terminate the inspector general and the
9 chief compliance officer.
10 Perhaps the delegates should have the authority to
11 approve or reject the appointment of trustees and removal of
12 trustees from the benefit funds.
13 Perhaps delegates should review job referral
14 activities and records to ensure that referrals are being
15 conducted fairly and properly.
16 Perhaps the delegates, a CPA and inspector general
17 should constitute a new District Council audit committee and
18 officers should not be members of that audit committee.
19 Perhaps --
20 THE COURT: Excuse me for interrupting.
21 These all sound like significant suggestions, but the
22 audit committee, is that perhaps, perhaps a stronger, is that a
23 real enforcement mechanism in corporations? Audit committees
24 play very vital and important role. Is there an audit
25 committee now? I guess I should know that and I don't. And if
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1 so, how would this one be different?
2 JUDGE CONBOY: Let me just say, Judge, that these
3 reforms are being considered in light of two very important
4 imperatives:
5 One is to create a check and balance upon the
6 executive power at Hudson Street and, therefore, reduce and
7 hopefully eliminate corruption;
8 Secondly -- and this is, indeed, of immense importance
9 to every member of the union and certainly every retired
10 member -- relates to the integrity of the funds. I am going to
11 ask Mr. McGuire when I am finished, Judge, and hopefully I
12 won't take too long, to give you a status report on his work
13 thus far.
14 THE COURT: Okay.
15 JUDGE CONBOY: The audit committee powers are being
16 considered as against adding the possible power of requiring
17 outside audits in tandem with the ongoing daily, weekly and
18 monthly work of the audit committee.
19 Finally and perhaps most importantly, and I won't put
20 a "perhaps" before this, delegates cannot be subject to adverse
21 employment action, intimidation, harassment or threats in the
22 good and faithful execution of their duties. There is a
23 provision in this draft -- and again it is a draft and we are
24 completely open to modifying or deleting anything in this draft
25 based upon a constructive dialogue with the United States
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1 Attorney and the review officer -- there is a power that allows
2 the inspector general to go directly to the review officer and
3 the U.S. Attorney in the event of any threat, actual or
4 implied, to the proper execution of his duties.
5 I might add, Judge, and I don't want to dwell on this
6 now, but the bylaws contain a very significant enhancement of
7 the inspector general power and the chief compliance officer
8 power. So overall we think in terms of the concerns of all the
9 parties in the courtroom that the proposed elections are on
10 track.
11 We concur completely with Mr. Walsh's recommendation
12 that the indirect election of the officers of Hudson Street is
13 off the table, that the empowerment of the delegates is the
14 critical, immediate focus and that the ultimate resolution of
15 the scope and kind of that empowerment will emerge from the
16 negotiations we expect to have with the United States Attorney
17 and the review officer.
18 Now, let me turn, Judge, to the anti-corruption
19 reforms because, as you know, both Judge Haight and yourself
20 have been critically focused upon the powers of the review
21 officer and the steps that Judge Haight directed be taken in
22 his order of June 3rd, 2010.
23 I want to direct the court's attention to Section 10
24 (b) of the order. That relates to the establishment of a
25 labor-management committee. The labor-management committee
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1 creation is, of course, going to be subject to collective
2 bargaining with the employers. I want to advise your Honor
3 that those negotiations are already in their preliminary stages
4 and under way. The critical final date is June 30th of this
5 year. Douglas McCarran, the General President of the UBC, will
6 be in New York this month to participate personally in these
7 negotiations. He will be the key individual throughout June in
8 terms of the intense and complex final negotiations that
9 hopefully are going to result in a contract by June 30th.
10 Your Honor, the reason why Section 10 (b) of Judge
11 Haight's order is so critical is the following: We believe
12 that the source of the corrupt activities of successive
13 administrations at Hudson Street resides at the work sites, and
14 what the 10 (b) negotiations contemplate is the creation of a
15 policing power with two functions:
16 The first will be more conventional. Under the
17 Inspector General, Mr. Scott Danielson, who is new and who I
18 think has received a very strong initial response from the
19 Hudson Street cadre, he is creating --
20 THE COURT: Strong favorable?
21 JUDGE CONBOY: Very favorable. He is creating, Judge,
22 an internal investigative resource that is going to monitor the
23 sites. There are many, many work sites typically on a given
24 day or in a given day in New York. There are over a thousand
25 of them. These flying squads, if you will, will seek to
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1 determine at various work sites where there have been
2 indications of problematic conduct, that they're known as
3 working under scale, that the jobs at those work sites are
4 being awarded according to the requirements of your consent
5 decree, and most importantly, that the funds are adequately
6 protected in terms of the hours recorded and the payments
7 remitted.
8 There is, however, a much more significant resource
9 that can be applied to this problem, and that involves the
10 importing of scanning technology at these job sites. This is
11 technology that we already have, and there are, I am told, both
12 an internal pilot and industry pilot that are under way, and it
13 is expected that as early as May 2nd there will be twelve sites
14 with the scanning technology in place.
15 This technology will capture as members report to job
16 sites every day the hours, the identification, the hours and
17 payments. There will be an immediate transmission to Mr.
18 McGuire's facility at the funds on a server to instantly
19 capture what monies have been committed and what monies
20 obviously are lagging.
21 We are going to do away hopefully in large measure
22 with this cumbersome month's-long collection committee process
23 which has put the funds -- and Mr. McGuire is going to give you
24 some numbers, Judge, and they're very, very, very troublesome
25 in terms of gaps between funds going -- monies going into the
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1 funds and benefits going out of the funds.
2 Now, obviously there are lots of questions with
3 respect to the labor-management committee. Who are the members
4 to be? What powers shall they have? What resources should be
5 applied? What number of sites should be the subject of the
6 scanning technology? How will the costs be shared?
7 There is some expectation that the owners can be
8 persuaded that they have an equal interest in having this kind
9 of oversight and scrutiny because Mr. McCarran has committed,
10 in terms of Section 10 (b), because as I understand it from the
11 United States Attorney, it was Mr. McCarran who suggested that
12 section to the U.S. Attorney in advance of the presentations to
13 Judge Haight and the issuance of Judge Haight's order.
14 We are putting a great deal of effort into the 10 (b)
15 requirement that the UBC agreed to with Judge Haight. We are
16 hopeful that as of June 30th, there will be a broad agreement
17 to put in place that entity.
18 Now, obviously, Judge Haight was very careful to say
19 that he understands that it's to be the subject of collective
20 bargaining and he also said that all he was expecting was a
21 good-faith effort to achieve this. We believe that it is
22 critical to the welfare of every member of the carpenters of
23 New York to have this system. We obviously are going to be
24 discussing this system in more concrete terms as they evolve
25 with Mr. Torrance and with Mr. Walsh, and obviously ultimately
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1 with your Honor.
2 We are completely committed to doing everything
3 possible to meet all concerns here, both the employers' concern
4 at the bargaining table, the government and the review
5 officer's concerns here and ultimately your Honor.
6 Now, finally I do want to say that there is an issue,
7 Judge, that is very meddlesome. I don't believe it is
8 constructive for me or anybody else to go into this today, but
9 it is the 50-50 rule. The 50-50 rule, as your Honor knows, is
10 a part of the procedure. It is a critical element of the
11 consent decree. It has been the subject of great controversy
12 for many years and I have discussed with Mr. Torrance and
13 Mr. Walsh the concerns of the UBC and what we think are the
14 concerns with respect to the employers.
15 We have asked Mr. Walsh and Mr. Torrance to simply
16 suspend debate on this for the moment, to keep an open mind
17 about the 50-50 rule, and then as we approach the negotiations,
18 my expectation is that we will be in a better position to
19 explain the pluses and minuses of the 50-50 rule. Those are
20 the remarks I want to make on the union democracy aspect and
21 anti-corruption aspect.
22 If your Honor has the patience, I would like to ask
23 Raymond McGuire to take a few minutes to discuss with you the
24 condition of the funds and the plans to deal with the
25 defalcations.
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1 THE COURT: Before we do that, what is your thought
2 about where these drafts which have just been circulated, what
3 is the next step? They obviously need to be reviewed. Is
4 there going to be a meet-and-confer among the three of you with
5 each other and how do you see that, Mr. Walsh?
6 MR. WALSH: Good morning, your Honor.
7 First of all, thank you to Mr. Conboy for submitting
8 the draft yesterday. I did have an opportunity to spend a
9 couple of hours looking at it and studying it. I can say there
10 are many improvements over the previously-published version of
11 the bylaws which were originally published in 1999, subject to
12 some amendments over the years.
13 The substance of the new bylaws contains many very
14 good features, but based on the discussions that I've had with
15 the UBC and Mr. Conboy and his colleagues, there are still some
16 points which I believe we need to address.
17 There has not been a complete meeting of the minds on
18 the substance, and I am glad Mr. Conboy has noted that we will
19 be getting together and having a meaningful discussion about
20 those areas where we need to discuss perhaps an improvement. I
21 think we can do that in fairly short order.
22 So I am also grateful for their commitment to the
23 election cycle. We stand ready to promulgate rules by August
24 15th, promulgation for comment, and I will say in advance that
25 I want to use every available method that will enfranchise the
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1 various members of the union, whether they be young and active
2 or retired and living in the other 49 states or abroad that
3 would include in-person voting if people prefer to do it that
4 way, mail voting and state of the art possibilities regarding
5 voting via the internet, secure voting via the internet. The
6 goal would be to franchise as many eligible members as
7 possible.
8 I would suggest with respect to some of the
9 propositions that may come before the court regarding other
10 measures which Mr. Conboy touched on, my recommendation would
11 be that we focus on issues as necessary and that there may, in
12 fact, even be a Pandora's box of issues that are not actually
13 before the court and that people pose them to your Honor as may
14 be required, so I think my focus, so I think my focus in this
15 proceeding -- and I am sure others will share their views -- is
16 that we focus on the question of the bylaws and the democratic
17 process and make that happen.
18 To the extent that any subsidiary issue becomes linked
19 to the question of governance and democracy which will require
20 a decision by the court, then it be appropriately framed when
21 that time arises.
22 THE COURT: What is a reasonable time-frame for these
23 bylaws to have your meet-and-confer?
24 MR. WALSH: I would hope to have all discussions
25 completed within the next 30 days. There will come a time, I
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1 believe, on the 30th day when the UBC will say this is our
2 proposal, these are the bylaws that we are submitting under
3 Paragraph 5 (b) for review, and the stipulation and order then
4 requires me to review them, and I will do so in a timely
5 fashion.
6 I am very hopeful, though, as Mr. Conboy mentioned, we
7 will be able to come together and have a detailed discussion
8 and work out whatever difficulties or differences we may have
9 at present. Thanks, Judge.
10 THE COURT: Mr. Torrance, does that schedule comport
11 with your understanding?
12 MR. TORRANCE: Yes, that is fine with us.
13 The stipulation 12 (b) in particular does contemplate
14 the review officer will look at the bylaws first. The
15 government will benefit greatly from his comments so we would
16 like to let that work itself out before we take any position.
17 THE COURT: Mr. McGuire?
18 Unless anybody wants to comment on what Mr. Conboy has
19 said so far?
20 MR. WEISS: I have one comment, your Honor.
21 Mr. Conboy made a comment about that he would tell the
22 review officer and all parties involved, when the UBC would
23 tell all parties involved well in advance when the
24 restructuring would be under way. As you well imagine, the
25 restructuring will reflect the constituency's ultimate vote in
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1 the election and affects the process. I would be interested in
2 knowing what the timetable is, when the restructuring of
3 locals, if there are any, is going to be undertaken.
4 JUDGE CONBOY: As I indicated, your Honor, we would
5 hope that prior to the August start of the election cycle, we
6 would certainly have a final picture as to what the structure,
7 whether the present structure is unchanged or whether there are
8 modifications to it. I can only speculate as to that and
9 obviously no one wants to hear sheer speculation.
10 My suggestion is we look at that point in the spirit
11 of what Mr. Walsh just said and that we deal with the bylaws
12 and we deal with the election schedule and then in advance of
13 that kickoff for the election process, we will be advising the
14 review officer and the government with respect to any changes
15 in the overall configuration of the District Council.
16 MR. CARY: Larry Cary, of Cary Kane for the Carpenters
17 Committee for Democracy & Workers Rights.
18 We have about 400 people who have signed onto the
19 committee at this point in time, rank and file carpenters. We
20 hope to and have had conversations with Judge Conboy and with
21 the review officer. We are attempting to be cooperative and
22 helpful. We think we can bring insights that may be overlooked
23 because we represent the rank and file, and it would be a great
24 help if as a courtesy the parties would share with us the
25 documents that they are reviewing because it would enable us to
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1 have a better opportunity to have those conversations with some
2 specifics in front of of us.
3 THE COURT: Any problem with that?
4 JUDGE CONBOY: Well, Judge, I think that as in all
5 things, patience is a virtue, and my own --
6 THE COURT: And so is openness.
7 JUDGE CONBOY: Yes. Yes, but as I understand the
8 consent decree, it says that the bylaws are to go to the review
9 officer and then they're to go to the U.S. Attorney.
10 My own view, and I have had conversations with counsel
11 and his partner and I am entirely accommodating on an informal
12 basis. I do not believe that a broadening of the negotiation
13 table on these bylaws in the first instance is a necessarily
14 good thing for anybody.
15 We don't want the deadlines to be missed. We don't
16 want the election to be put off. We are trying to
17 constructively balance everybody's interest here.
18 THE COURT: So how in the practice and when do they
19 get input in the process as you see it?
20 JUDGE CONBOY: I would think that there is a point at
21 which after the private discussions that are contemplated in
22 the order are completed, then it seems to me the bylaws that
23 are a final product can be vetted.
24 THE COURT: So we're now in April, early April. Lay
25 it out for us how you see this process unfolding with time.
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1 JUDGE CONBOY: I think Mr. Walsh's 30-day suggestion
2 is sound. Obviously, I would not presume to circumvent or
3 undermine the ability of both the review officer and the United
4 States Attorney to carry out their responsibilities under the
5 consent decree. So my thought would be that what we're looking
6 at is the beginning of May and the middle of August are the
7 next two critical points in terms of the bylaws, and perhaps I
8 see Mr. Walsh getting ready to add his view, and I welcome it.
9 MR. WALSH: Judge, I think it is best to just stick
10 with the literal direction of the stipulation and order so that
11 if we stick with May 6th as the target date for agreement or
12 agreement to disagree on any points, that the formal review
13 would occur on or after May 6th.
14 If there is any veto as contemplated, then the UBC as
15 an affected party would have 30 days to file a petition for
16 review with the court. It would --
17 THE COURT: 30 days from May 6th?
18 MR. WALSH: If there was any exercise of the veto
19 authority at that time. I would expect to do this in fairly
20 short order so that probably the addition of only, I'd say, 10
21 more days, to approximately the 15th or 16th, would be enough
22 time to render a decision or announce agreement on those
23 points. Then the process contemplated by the stipulation and
24 order would follow.
25 THE COURT: So where does counsel fit in there?
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1 MR. WALSH: Your Honor would actually have to enlarge
2 the scope of affected parties or state who the affected parties
3 are in order for participants to file a submission with the
4 court with respect to any decision that I made on the bylaws.
5 THE COURT: Is it -- hold on a second -- is it naive
6 or realistic to think at the end of the 30 days you and Judge
7 Conboy might have agreement as to what those bylaws say?
8 MR. WALSH: I think that there is a better chance that
9 there will be agreement than there will be disagreement at this
10 point.
11 MR. CARY: First let me just say that our request is
12 being made in the spirit of trying to be helpful, not to try to
13 delay the process.
14 THE COURT: I think everybody takes it in that vein.
15 MR. CARY: Obviously, the membership has a critical
16 interest in the issue of how the organization is going to be
17 constructed and what the rules will be.
18 THE COURT: Right.
19 MR. CARY: We are only asking for access to the
20 documents so we can engage in the informal discussions we would
21 anticipate having with the review officer and with the UBC's
22 attorney in order to input if we think there is something that
23 needs to be inputted. We are not looking to delay the process.
24 We are not looking to become a formal party in that sense.
25 I have to also point out that there's the possibility
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1 that if there is agreement between the UBC and the review
2 officer, there is no opportunity potentially for the membership
3 to comment on the structures as I understand what was being
4 suggested to the court.
5 THE COURT: Why not? Why wouldn't there be? Why not?
6 MR. WALSH: I think there would be.
7 THE COURT: It seems to me --
8 MR. WALSH: Mr. Cary --
9 THE COURT: -- there would be no preclusion whether
10 there is agreement or disagreement.
11 MR. WALSH: -- if there was a petition for review
12 filed, you would obviously, if I were you, petition the court
13 for an opportunity to be heard in that regard.
14 I would suggest, your Honor, that I would very much
15 welcome the input of concerned and knowledgeable members of the
16 union. The stipulation gives me the authority to communicate
17 with them as may be necessary.
18 I would suggest that direct meetings, and if the UBC
19 is asserting that there is any kind of a confidentiality
20 interest, I would certainly be willing to meet with people,
21 show them the documents and spend as much time as necessary in
22 talking about the substance of it and leaving the drafts in my
23 custody.
24 MR. CARY: I have no objection to that, your Honor. I
25 think it is a fine solution.
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1 THE COURT: I think it is a fine idea. That means
2 your input would start even sooner on this informal basis and
3 expedite --
4 MR. CARY: I would like to thank the review officer
5 for the suggestion.
6 THE COURT: Great idea!
7 MR. WALSH: I would like the record to confirm my
8 understanding is Mr. Conboy has no suggestion to that approach?
9 JUDGE CONBOY: No, your Honor. That is fine.
10 THE COURT: Great. Let's turn to Mr. McGuire at this
11 point and then still hear from other people if they wish to be
12 heard.
13 MR. McGUIRE: Thank you, your Honor.
14 THE COURT: You bet!
15 MR. McGUIRE: My firm was appointed counsel to the
16 fringe benefit funds in late December. There are, by the way,
17 six jointly trusteed funds: The welfare fund, the annuity
18 fund, the training fund, the vacation and holiday fund, the
19 pension fund, and the charitable giving fund.
20 We had some immediate crises, many crises we had to
21 deal with, but in the last six weeks we've turned our attention
22 to what I might broadly describe as threats to the continued
23 vitality and economic integrity of the funds.
24 THE COURT: Meaning that there won't be enough money
25 available to pay out what is supposed to be paid out?
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1 MR. McGUIRE: Exactly, your Honor. The threats come
2 from four sources:
3 First, the fraud and cheating that has preoccupied all
4 of us for the last several years. Employers simply not making
5 the contributions they are obliged to make under their
6 collective bargaining;
7 Then a related phenomenon of legitimate contractors
8 who for one reason or another are financially unable to make
9 the contributions they are required to make under the
10 collective bargaining agreement;
11 Then we have perhaps the largest threat, and that is a
12 steady erosion in market share, that the carpenters union and
13 every other construction union in New York has experienced over
14 the last 20 years;
15 The fourth threat which we're all familiar with on a
16 personal level is the rising costs of providing benefits,
17 particularly medical benefits.
18 We first turned our attention to the fraud problem.
19 We reviewed carefully the funds' records. We reviewed the
20 criminal dockets of the various cases brought by the U.S.
21 Attorney's Office against both union officials and contractors.
22 We have identified the, in the first instance, the three former
23 trustees, union trustees, one employer trustee, who were active
24 participants in the fraudulent activity.
25 We have identified, in addition, six other union
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1 officials besides the two trustees who were actively involved
2 in the fraud. We have identified at least 11 companies and
3 five individual contractors who were involved in the fraudulent
4 activity.
5 We suspect there are quite a bit more contractors and
6 we are going to make it our business to try to ferret their
7 identities out. Some of the criminal defendants have been
8 ordered to pay to the funds restitution. We recently got a
9 restitution order against Michael Ford, for example.
10 THE COURT: For how much?
11 MR. McGUIRE: $3.9 million, your Honor. We don't
12 anticipate that we'll be able to collect but a small fraction
13 of that.
14 We have, the funds have initiated civil actions,
15 arbitrations against some of the contractors including Pit Con
16 and Turbo and Pyramid. We got a $4.5 million settlement from
17 On Par, James Murray's firm, and we believe, however, that we
18 have only collected a small percentage of the amounts of money
19 that were illegally diverted from the funds. We estimate that
20 amount to be close to $20 million.
21 THE COURT: That went missing?
22 MR. McGUIRE: That went missing, that was never
23 contributed, should have been contributed, and we are exploring
24 various options. We're initiating civil litigations against
25 some or all of the miscreants involved in this adventure. We
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1 will probably in the next 60 days be initiating a variety of
2 lawsuits against anybody we can identify who betrayed his or
3 her obligation to the funds.
4 The second problem, the delinquent employer, here
5 we've worked closely with the review officer to try to figure
6 out how to avoid getting in a position that the funds seem to
7 often get into of waking up one morning and realizing that
8 Contractor A owes the funds $500,000. We believe that the
9 scanning technology that the review officer has advocated and
10 that is in its experimental stage now is a partial answer to
11 that problem.
12 We believe the Inspector General is part of the
13 answer. We believe that the labor-management committee which
14 is being negotiated as we speak could well provide some of the
15 answers.
16 We have a new policy that was suggested by the review
17 officer, where a contractor is delinquent more than once in a
18 three-year period and asks for what is known as a payment plan,
19 we bring that contractor in, we sit the contractor down, we
20 explain that we're not a bank. We ask for a list of assets,
21 financial assets. We do asset searches.
22 So we're tightening up that procedure and believe that
23 we will cut down -- we will never eliminate this issue of
24 delinquent contributions. It is often the contractors are
25 simply not being paid for the work he is doing on a particular
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1 project. That is often the situation they face.
2 The market share problem is serious. We had 23
3 million hours worked in 2008. We had 19 million hours --
4 sorry -- 17 million hours worked in 2009. We project there
5 will be 15 million hours worked in 2010. No. I am sorry. I
6 got that wrong. Let me get it right.
7 23 million in 2008, 21 million in 2009, and 17 million
8 in 2010. We project 15 million in 2011. That is a 35 percent
9 reduction in the number of hours worked, and it is the far, by
10 far the most serious problem the funds face. If we don't
11 increase revenues to the funds, the welfare fund will not be
12 able to provide the benefits it currently provides in a 10-year
13 period. We'll not be bankrupt, but we will have to
14 significantly reduce benefits unless we can address the problem
15 on the revenue side.
16 We also have a serious problem on the expense side,
17 and that is some of the benefits, frankly, and particularly the
18 welfare fund is terribly expensive. It has features that are
19 unusual and make it unusually expensive.
20 Retirees get full medical coverage at age 55, for
21 example. The trustees have told our consultant Segal we want
22 to explore ways of reducing the costs of the benefits.
23 THE COURT: Before you get to the costs, what are the
24 solutions for increasing the revenues, or that is obviously a
25 big issue?
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1 MR. McGUIRE: Yes. The District Council obviously has
2 primary responsibility, and it is possibly among one of the
3 more active unions in addressing that issue. It has effective
4 organizing techniques. You may hear some of these folks'
5 whistles and shouts and placards at nonunion job sites. It is
6 approaching nonunion developers and basically educating the
7 nonunion developer on the advantages of skilled, safe union
8 construction.
9 It is working with all of its associations,
10 particularly the wall and ceiling association, to make the
11 contract as tight and effective as possible. This is where we
12 constantly hear the problem of the 50-50 rule reduces the
13 competitiveness of the employer side. So possibly the
14 substitution of the labor-management committee and the scanning
15 technology could help there as well.
16 We don't have a direct opportunity really to do much
17 about the declining revenue side except we are going to get
18 every penny we're entitled to. If the market share keeps the
19 client -- we're well below 50 percent, your Honor, in New York
20 City. The unionized construction industry is well below 50
21 percent. In the boroughs, we're at 30 percent. We have to do
22 something about this. The entire industry has to do something
23 about this.
24 The carpenters have always been regarded as one of the
25 more progressive forces in that respect. We are, with respect
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1 to the 10 (b) issue and the scanning technology, to the extent
2 we can influence employer associations and encourage them to
3 have an open mind and to be sympathetic to that effort by the
4 United Brotherhood, we're doing that.
5 That is it, your Honor.
6 THE COURT: Great. Okay. Mr. Walsh, do you want to
7 comment at all on any of that before I ask for anyone else?
8 MR. WALSH: Those are all generally accurate
9 statements. There is an urgent need. Perhaps a more
10 significant issue facing the union and the continued success of
11 the union, it must find a way to increase its market share and
12 provide the manhours which are the lifeblood of the funds.
13 THE COURT: Is it any different here in New York than
14 other parts of the country?
15 Is it a universal issue?
16 MR. WALSH: It is a universal issue, I think. We have
17 all seen media accounts of the impact on unionized operations
18 certainly of the 2008 crash, but I think a general trend away
19 from organized labor in many aspects of industry.
20 We have also within my office really attempted to
21 shine a light on the importance of making sure that the
22 organizing department is doing everything it can working with
23 the various functions within the District Council such as the
24 political action office to make sure that no approach is being
25 missed, that if there are anything from politicians to
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1 community boards, to developers, the need to be engaged, that
2 they should do it and that any conventional adherence which is
3 being done now is just not cutting it basically.
4 They have got to keep an open mind, and I think that
5 there are many members of the union who have their own very
6 strong beliefs about the organizing activities going on now.
7 It is my hope that the District Council keeps an open mind
8 about soliciting and hearing the input from the rank and file
9 members who have contributed I think some very sound
10 suggestions to my people.
11 THE COURT: Good. So some of you in the audience have
12 indicated you wanted to be heard. I am happy to have a couple
13 of minutes for each of you. Have you signed in? You can just
14 come up to the podium and indicate your name.
15 MR. CLARKE: I would like to address the court.
16 THE COURT: Wait till you get here.
17 MR. WEISS: Before we get to the audience, Mr. Bilello
18 would like to be heard. He wasn't the movant on the initial
19 motion, so with your initial indulgence?
20 THE COURT: Stand by.
21 MR. BILELLO: Thank you, your Honor.
22 THE COURT: Your motion is pending. I haven't heard
23 any opposition to it. What most people are talking about is
24 implementation about it and how one goes about doing that.
25 MR. BILELLO: I wanted to make a comment on some of
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1 the issues that were brought up. You had asked in the
2 beginning of the proceeding about the rank and file vote as
3 opposed to the delegate in light of the fact of what has taken
4 place with the last two rank and file votes and the history of
5 the last decade or so whether or not it would be successful.
6 It should be noted the stipulation and order that is
7 in place now since last summer is a key part of making that
8 successful. Moving forward with people eliminated from the
9 process and the oversight that that order has given us, that is
10 the key to making us successful moving forward.
11 This is an organization that has had a lot of good
12 systems in place and a lot of good rules that have been changed
13 over the years to suit corrupt people instead of changing those
14 people. Now we finally have gotten to the point where we are
15 able to eliminate certain people, certain influences and we
16 have that in place, and that will make us successful.
17 That being said, the 50-50 issue was brought up. That
18 was a system that was extremely successful in ridding
19 corruption on the job sites. That was virtually eliminated
20 around 1998 with a request system that was added to that that
21 basically made it a free mobility system. We know the history
22 of the last decade or so what took place here. The 50-50, in
23 my mind, was a valuable tool against corruption.
24 The other thing was about empowering the delegates. I
25 am all for that. I wish I would have been able to review the
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1 bylaws and comment further on that, but it has always been an
2 issue that I thought was key, is giving the delegates the power
3 to control what goes on here, as I said the last time, not
4 having them in line for the next jobs, certain safeguards in
5 place regarding that, and I look forward to seeing what is
6 presented on that issue.
7 That being said, with the delegates it is important
8 for the membership to know what is going to happen here with
9 the restructuring of these locals because the locals elect
10 those delegates. If the UBC is allowed to wait until the very
11 last minute here to tell us what they're going to do with these
12 locals, it is only going to put us in more turmoil and going to
13 affect those elections.
14 We need to know who we're going to elect from our
15 locals to be the delegates. If we don't know what local we are
16 going to be in, we are not going to be able to do that.
17 THE COURT: You need to know about this restructuring.
18 MR. BILELLO: If they dissolve the locals, and
19 personally I don't see the need for it, but that is beyond my
20 control. If they're going to do it, we need to know ASAP what
21 we are going to look like.
22 THE COURT: Thank you. Yes, sir.
23 My name is Eugene Clarke. I am a 52-year member of
24 the carpenters union. For the last 10 years I started to get
25 results on my investigations of wrongdoings into my union and
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1 robbery of funds and everything that went on.
2 In the beginning we came up with a guy named Harvey
3 Torack from the Department of Labor. He was put in to find
4 wrongdoing of the contractors. He had a control of the labor
5 management fund at the time and he hired certain brothers to go
6 out there and find the evidence. They were very successful.
7 They were starting to get there. Before you know it, he was
8 fired -- well, not fired. He was told he will get retired.
9 Less than three years on the job of looking for wrongdoing, and
10 he was finding it, they got rid of him. They gave him a
11 pension. They gave him the pension even though he wasn't three
12 years there. The trustees gave it to him on the assumption of
13 his overtime, and it was just one lie.
14 Then along comes our boy Walter Mack, a very good man.
15 Walter Mack does the job. He is doing the job. He is going
16 crazy. He is getting every contractor running, you got it?
17 All of a sudden, the District Council, they get rid of him.
18 They said no, he is too expensive. In comes Bill Callahan.
19 Callahan comes in. With Callahan, all of a sudden everything
20 just dies down, nothing happens.
21 Thank God Dennis Walsh finally gets in. By this time
22 all the harm had been done and our international stood by idly
23 and never made an attempt to stop what was going on, which was
24 their fiduciary reason. That is what their responsibility was,
25 but they didn't come in.
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1 Now they want to come in. They want to take charge.
2 They want to be the trustee. They want to negotiate our
3 contract. Nonsense! Where were they when we needed them?
4 In 2005, August, at our convention Mike Ford was so
5 out of it with drugs and everything, they wanted to put him --
6 our international wanted to put him into rehab. Brian O'Dwyre,
7 Gary Riceman, they go down there and they say we take care of
8 New York, we'll take him back with us. What do you think?
9 They took him back to New York and for five more years we had a
10 junkie running our union.
11 And they didn't do any follow-up on that, you
12 understand?
13 THE COURT: I do.
14 MR. CLARKE: Some of the things I would like you to do
15 for the membership that has been robbed, raped and played for
16 years. The first thing I would like you to do is have --
17 (Pause). By the way, in 2010, sitting on the podium was Pat
18 McGuinness. He is the retired president of the New York City
19 District Council who got booted out for association with the
20 Genovese crime family, but there he is sitting up there with
21 all our international representatives, okay?
22 What is going on there?
23 What I would like before anything goes awry, I would
24 like Doug McCarran to sign the statement that Mr. Walsh has put
25 out for everybody, that they have no mob association. Listen,
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1 our union is wrecked here in New York and it is because of poor
2 supervision in the District Council and in our international.
3 Who are they now to come in and say we are taking this over or
4 taking that over and we're going to do -- why didn't you do
5 that when the problem was there?
6 When Judge Conboy left, it started again. It went
7 crazy. Do you understand? Walter Mack was abused. They had
8 no right to take him out.
9 All of Callahan's reports are sealed over in Judge
10 Haight's court. I think since the membership paid for these,
11 that the don't release them to us? We would like to see what
12 went on with Bill Callahan and O'Dwyer.
13 When we had the, when the international came into our
14 counsel and took it over, put it under trusteeship, we had a
15 fellow named Tom Reynolds who ran our contract, who ran our
16 funds. He had doubled our money in five years. They accused
17 him of wrongdoing, and they're going to do this and bring him
18 to court. It just disappeared. All of these allegations
19 disappeared. Tom Reynolds went his way and went down to
20 Philadelphia where he took care of the municipal pension funds
21 and everything down there.
22 THE COURT: You mean he is an investment advisor?
23 MR. CLARKE: Tom Reynolds went down to Philadelphia
24 and he quadrupled their money. How do you like that? That is
25 the guy they accused of being wrongdoing.
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1 I would like you to investigate Callahan and help us.
2 We would like to see what he did during his course.
3 Also I don't understand why our international is
4 coming in now like a cavalry when they should stay home and
5 clean their own mess up. Thank you.
6 THE COURT: Mr. McGuire, he raises an interesting
7 question and a good one. How are the funds and who is
8 responsible for investing in the funds?
9 How big are these funds collectively currently and how
10 are they invested?
11 MR. McGUIRE: The funds, we have about $3.75 billion
12 under active management, your Honor. Like all Taft Hartley
13 funds, we have an investment advisor, and our investment
14 advisor is Institutional Fiduciary Services, and it is run by a
15 former official in the United States Department of Labor, Frank
16 Lilly. They are highly respected. They have done extremely
17 well for the carpenters' funds.
18 Then they basically advise us as to which mutual
19 funds, which real estate investments, which hedge funds we just
20 invested in, fund of funds. They identify three or four
21 possible institutions. We bring them in. We interview them,
22 grade them and then vote on which one to use as an investment
23 vehicle.
24 THE COURT: Is there an historical reason, historical
25 return on investment? And what would that be?
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1 MR. McGUIRE: I am not sure of the short term return.
2 Like everybody else, we took a -- we suffered in 2008 and 9,
3 but not, not as much as the broader markets. We have
4 outperformed the markets, your Honor.
5 THE COURT: Thanks. Anybody else want to be heard?
6 Yes?
7 MR. LEBO: Your Honor, my name is William Lebo. I
8 have communicated with the court twice or three times since,
9 your Honor, the onset of these hearings. Recently I put in a
10 submission in support of the motion. You probably only got it
11 yesterday so I really can't go into too much into it.
12 THE COURT: Yes.
13 MR. LEBO: However, in it I state the reasons we have
14 to have the direct membership elections and I believe they're
15 correct under the consent decree, they have been asked, the
16 direct elections.
17 Going forward I also brought up Harrington versus
18 Shell, and all the arguments there that the District Council,
19 especially ours, has taken on so many of the purposes and
20 functions of a local union, and the local unions have been
21 stripped of all their functions and powers, that the local --
22 the New York City District Council is now, in fact, a local
23 union. I did ask the court to declare that. Whether or not
24 again that is another -- I am sure it is an argument for
25 another day, but I do ask the court that.
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1 Going forward I found it interesting that Mr. Conboy
2 included Mr. Walsh, Mr. Torrance in the discussions about the
3 bylaws and left the membership out. We are a great group of
4 individuals. We have lines, needs and wants. These bylaws are
5 going to rule us. We should have at least input and full
6 transparency on what they're going to be before they are.
7 THE COURT: I am confident that you will.
8 MR. LEBO: I am, too. Thanks to Dennis Walsh, we have
9 gotten more information about what is really going on that
10 we've ever gotten before. He has done an incredible job in
11 including the membership, that I am really, really glad he's
12 there.
13 Now I was going to bring it up because the UBC pulled
14 out their letter about the manning issues. Since Mr. Conboy
15 brought it up, the 50-50 or 67-33 granting rule we have now
16 ordered by Judge Haight still gives the contractors the edge.
17 They have 67 percent is ruling this.
18 What has been going on with this? When they request a
19 man off the out-of-work list, what is happened in the past,
20 that man could already be on the job. He is transferred from
21 one job to the next, put his name on the -- one day he will put
22 his name on the list. That same day the contractor will fax to
23 the District Council they're requesting that man. He is gone
24 from that job to the next job. That next job the shop steward
25 looks at his paper, he gets this guy that says he has been
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1 requested. He calls his local union to find out if, in fact,
2 this request has gone further.
3 Sometimes it hasn't for one reason or another, the man
4 forgot to put his name on the out-of-work list, the company
5 didn't make the proper request. So what, so basically what
6 happens next is now he here is a man already on the job. He
7 has already been requested. It was denied. They resubmit it.
8 They resubmit the request and he is now considered requested
9 off the job. That is nonsense. He is already on the job.
10 There is something wrong with that process.
11 Now, 50-50 at least got the out-of-work list to be
12 fair. We have 5,000 members on the out-of-work list. It
13 doesn't move at. It drags. There are guys on that list for
14 over a year, and there is a problem to request.
15 THE COURT: A what?
16 MR. LEBO: A problem with the request. The
17 contractors request a man off the list, and sometimes that man
18 is not skilled. There are issues that have to be addressed.
19 If the man is not skilled, that still has to be taken off his,
20 off his skill list on the out-of-work list. This hasn't
21 happened. I explained that to you in a letter.
22 THE COURT: Yes.
23 MR. LEBO: There are issues that have to be addressed.
24 Full mobility is going to disenfranchise 5,000 members that
25 work off that out-of-work list. It is discriminatory to them
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1 and it is just not a fair system here in New York City. It
2 might work somewhere else in Iowa or wherever, but it doesn't
3 work here. There are guys that actually work off the
4 out-of-work list.
5 As I explained to you, those local guys are usually
6 the ones that catch the corruption. They're the ones that
7 report it. They're the ones that see it, call them on it, and
8 that is how we find out what is going on on the job. It is not
9 the company because they keep their mouths closed because they
10 want to continue with their company.
11 We need to actually back off the 67-33, get back to
12 the 50-50 rule, but we do have to fix the out-of-work list,
13 there is no doubt. Dennis has said it before, nobody is happy
14 with this thing. It does need -- there are issues that need to
15 be addressed and fixed with the contractors in mind. The 50-50
16 has to come back to where it is, in my opinion.
17 Thank you, your Honor.
18 THE COURT: Thank you.
19 MR. NEE: I am Patrick Nee.
20 THE COURT: Your last name?
21 MR. NEE: Nee, N E E.
22 The first thing I would like to get to is go back to
23 the other workers, like he said, in New York we have 500,000
24 people who can't put their name on the out-of-work list that
25 makes it impossible to police. We have New Jersey and Long
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1 Island, all of them, we can't go on their out-of-work list.
2 The counsel has agreed that they're going to get them
3 off, change their rules so we can go on theirs. Since this
4 thing has put been put in, they can go on our out-of-work list
5 and work. They haven't got any of the job sites we have. We
6 have to be unemployed, and they go on the out-of-work list.
7 They don't. They can work in New Jersey and come to New York
8 and work off us. They get their jobs off of us. We can't
9 police our out-of-work list because it is 500,000 people.
10 If you take a New York carpenter and take his skill
11 off the out-of-work list, you still have that other 400
12 whatever thousand who can still go on our out-of-work list who
13 have never been checked. We need to bring the number down to
14 where you can police it. I believe it is restricted to New
15 York City.
16 We also don't have a 50-50 because the people from the
17 out-of-work list can be from Philadelphia or wherever. They
18 come to New York. So our jobs might have one person from New
19 York, a lot of people off the out-of-work list, but they're not
20 going to be New York carpenters. I would like any job to have
21 a minimum of 50 percent New York City carpenters on that job.
22 The next thing is, I don't know if this was brought
23 up. Yesterday the UBC dissolved a bunch of locals in Jersey,
24 merged and made a new council and all of this. I don't want to
25 that to happen here. The UBC is talking about dissolving our
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1 locals but not giving us credit to have an input in this.
2 We deserve a say. This is our local and our town.
3 They will go back to Washington and we have to live with what
4 they brought in. If they have something that will benefit the
5 members, they could at least come out to the membership and
6 tell them about it. What they do is they shut down your local,
7 shut out all the officers. You have to take care and have to
8 move with UBC in small groups rather than staying from Local
9 157. If they came in and told us we are dissolving your local
10 and this is why, at least we would be able to say this is why
11 we don't want this. This is what we are not being offered.
12 Mr. Conboy in all of his comments never once mentioned
13 we are going to bring the members in to participate in
14 anything. Mr. Walsh is doing this. Mr. Walsh is the only
15 person who has look to the membership and look to the
16 membership.
17 The reason I got involved in any of this was when I
18 heard about the supervision, I want to find out what was going
19 on. I did not have any power to find out anything. I went to
20 the funds. The funds will not tell you anything. You're
21 completely out of the loop. You're not allowed delegates.
22 Mr. Conboy in his submission wants to give us back the
23 same delegates as we had, the rubber stamp committee which is
24 what they're called. I read his submissions here in court.
25 That was what he had. We don't want that again.
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1 Everything we are getting is because of Mr. Walsh. We
2 are getting nothing from the UBC except slowing Mr. Walsh down.
3 I don't want to grandstand or anything, but everything we get,
4 and you can go to any union member, is because of Mr. Walsh.
5 He has to fight with the UBC to bring in basic protections for
6 us, to give us any -- have any say in this union at all, it is
7 coming from the federal government. We have UBC supposed to
8 represent us. They're not. Mr. Walsh is the head of our union
9 as far as every member here is concerned.
10 As for the counsel being a local, there is a labor
11 organization has to perform certain functions in order to be a
12 labor organization. In order for the counsel not to be a local
13 labor organization, it has to have some bodies below it. We
14 are not. Mr. Valentine has admitted to it. Mr. Spencer
15 admitted to it by refusing to speak to to me any more when I
16 brought this up at the meeting.
17 Lawrence DeRico, President of our Union, hasn't --
18 THE COURT: What?
19 MR. NEE: -- told us that our local performs no
20 functions. They don't do it. They collect dues, okay?
21 If the counsel is to be an intermediate body, the
22 locals have to have some powers, which I haven't seen. Mr.
23 Lebo said it. This has to be addressed. Either the locals are
24 going to be given powers or we get rid of the locals and go
25 straight to the council because I want to be dealing with the
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1 person who is dealing with something. I don't want to be
2 asking Lawrence DeRico to ask somebody to ask somebody what is
3 going on. I want the person making the decisions to be able to
4 ask him a question directly.
5 I got more, but I --
6 THE COURT: Do other people, anybody else want to be
7 heard?
8 MR. NEE: Sorry. One more thing: Trusteeship. I
9 don't support the UBC being left in charge of us for the simple
10 reason that they haven't done anything. For the first 9 months
11 they were here, they didn't do anything. I am not looking to
12 go to elections. I am happy with Mr. Walsh's timeline, but I
13 would like the UBC taken out of the picture simply because Mr.
14 Spencer, who is our supervisor, on December 1st, 2009, he was
15 telling me then that they were looking for an extension of the
16 supervision or the trusteeship. This is December 1st, 2009.
17 By the time Mr. Walsh had arrived next June, they
18 hadn't done anything. He had already decided he needed more
19 time, but he wasn't trying to get everything accomplished in
20 the time they did have. They weren't trying to get something
21 done in the 18 months. They were going to get more time in the
22 end of it to do this stuff. This is where they're open to a
23 time now when they negotiate our contracts and have flatout
24 said we members cannot have any input into this, can't ratify
25 it or do anything.
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1 They don't want suggestions. They don't want anything
2 from us. They know so much better more than we we do. They
3 don't need us. This is our union, not Spencer's or McCarran's
4 union, but they are taking our union from us. They we have no
5 say, no control of our union.
6 Thank your Honor for your time.
7 THE COURT: Thank you.
8 MR. ARANA: Hello. I am Donald Arana from Local 157.
9 THE COURT: Nice to see you.
10 MR. ARANA: I want to give you a little insight from a
11 member. You have heard from the lawyers, the UBC, the review
12 officer, who is the membership is totally for this review
13 officer. Thank god for him. This is just to give you a little
14 insight.
15 As far as the delegates to the District Council, I
16 heard the judge speaking on that, he is looking to empower them
17 and give them more duties. The current situation that we are
18 currently in is due to the corrupt elected officials that were
19 in place as well as the delegate body that was in place at the
20 time.
21 Now what he is proposing, I forget the word how he
22 said it, if it may, or whatever word he used --
23 A VOICE: "Perhaps."
24 MR. ARANA: Perhaps if delegates were given more
25 power, the membership will benefit. I have to disagree with
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1 that. If you give these small body of delegates more power,
2 they're easier to corrupt. The membership, the individual, one
3 man one vote should have the powers. The reason, why my
4 opinion as a member, I am only speaking a member, hard working
5 member, these delegates were easily corrupted and influenced in
6 the past is because the current system is and was then there
7 that the membership elects the delegates to the District
8 Council to represent their interest as rank and file members
9 working on the job site.
10 Now, the history of the New York City District Council
11 has been once that delegate is in position and he represents
12 the rank and file members, it has been a his information these
13 delegates get promoted by the New York City District Council
14 officers to paying positions within the District Council. So
15 now they go from being a carpenter that works hammering nails
16 to being elected by the membership to represent the membership.
17 Now as soon as they get in there, there has been a history of
18 these people all of a sudden getting promotions and jobs within
19 the District Council.
20 Now, that is a direct conflict of interest where that
21 person is put in a situation where he has to represent the
22 members, and now he also in this particular situation would be
23 the UBC that we're under their supervision right now will make
24 a recommendation to approve a $2.00 pay cut which we received
25 in January. We deferred our $2.00 an hour raise, and if the
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1 delegates to the District Council were to vote on that and then
2 it was recommended by the UBC, they were easily being persuaded
3 to take the side of the UBC.
4 THE COURT: I get it. You're suggesting they get
5 cooperative, right?
6 MR. ARANA: Yes, not be paid employees of District
7 Council. That is a conflict of interest. They're making
8 decisions for the membership or going against the person who
9 puts food on their plate to feed their families. It is a
10 direct conflict of interest and we take a chance this person is
11 of high morals.
12 THE COURT: What is the option?
13 MR. ARANA: The option would be it has to be a
14 mandatory change. If you're elected as a delegate to District
15 Council, you cannot accept a paid position by the District
16 Council. If you want to accept a paid position by the District
17 Council, that is your right, but you have to defer your spot as
18 a delegate. You can't wear two hats.
19 That is currently what they do, they wear hats. You
20 have to take one hat. You want the paying job, take the paid
21 job and give up your delegate position to a rank and file
22 member. That is not a conflict of interest position.
23 Another quick point you want to make, the out-of-work
24 list. The out-of-work list has been broken and is
25 dysfunctional and currently is a disgrace the way it works
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1 right now. The former judge here mentioned that.
2 THE COURT: Judge Haight?
3 MR. ARANA: Scott Danielson was promoted heading of
4 the IG's. They said this was taken a position as very
5 favorable by District Council. I just want to make a point of
6 interest that this is the person, unless I am wrong proven by
7 somebody here who has more knowledge than I do, that is the
8 person in charge of the out-of-work list for the last 10 years.
9 We as a member can't see how a decision was made by the UBC to
10 promote him to the head of the IG department when the
11 out-of-work list is broken and everybody is failing to fix it
12 because it has been broken so badly. On what basis is he
13 promoted to running the IG? Like I can't see that.
14 Another quick point is we're under the supervision of
15 the UBC, and Doug McCarran calls all the shots as of now. That
16 is a plain fact, he is calling all the shots right now. His
17 brother Eugene Clarke has, you know, hit the mail on the head
18 and explained that. Where was our UBC supervision when this
19 place was running rampant and disgraceful? How come they
20 didn't step in?
21 Now all of a sudden if they're stepping at contract
22 time and now all of a sudden they have the power to dissolve
23 locals? Dennis Walsh is doing a fantastic job. When his time
24 is done here, if McCarran is still, you know, in charge of the
25 UBC, then if there is still fair --
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1 THE COURT: Still what?
2 MR. ARANA: If McCarran is still the general president
3 of the UBC when Dennis Walsh is done with his work here and
4 doing a great job, I think it is a disturbance that McCarran
5 steps in while he is eliminating the criminal element and the
6 the District Council, and McCarran steps in as a hero,
7 dissolving locals, making changes.
8 I think all of that should be suspended until Dennis
9 Walsh is done with his tenure here, and then if the UBC feels
10 there is still corruption and issues that need to be addressed,
11 then I would see properly him stepping and making changes.
12 It should be in Dennis Walsh's hands right now, and
13 dissolution and dissolve-ment of locals or promotions of all
14 the stuff going on is not good. I can't see him stepping in
15 and dissolving locals while Dennis Walsh is doing a great job.
16 They're negotiating our contracts right now. That is
17 the most important thing in the world to a union carpenter
18 right now. They weren't elected. This is a democracy. They
19 weren't elected to negotiate our contract. I speak on behalf
20 of the membership. We want elected representation in their
21 negotiating our contracts, not a person.
22 We don't want a person that watched the New York City
23 go into a cesspool and become totally dysfunctional, all of a
24 sudden now stepping up to the plate saying I want to represent
25 the contracts on behalf of New York City carpenters. That is a
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1 disgrace, and negotiations should be suspended until December
2 when Dennis Walsh is done doing the great job doing and putting
3 elected officials in there to negotiate and bargain on members'
4 behalf. Thank you.
5 THE COURT: We have to wrap up fairly soon.
6 MR. WELLINGTON: Good morning. Good morning to
7 officials and good morning to Mr. Walsh and congratulations.
8 THE COURT: Your name is?
9 MR. WELLINGTON: Calyx Wellington.
10 First I want to make mention of the beautiful comments
11 my comrades have made. It touches on almost everything I had
12 in my mind. What is most important to me is that the UBC
13 members have dismantled the right cause of a union functioning
14 properly in a big state like New York. We don't know how the
15 union is functioning any more.
16 For example, we have never seen, I personally have
17 never seen the UBC come to the District Council and have an
18 open forum for us to ask questions, never.
19 Second, they are making revisions, they're making
20 decisions on every other factor that affects us. We don't have
21 input. I would love as often now if Mr. Berman, you could at
22 least ask them to come in and have an open forum with us for
23 the next six months, at least three or more open forums because
24 we need to be certain and we need our questions to be answered.
25 I know for a fact I can point my hands to them for all
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1 they're doing, all the things that they have done wrong in my
2 union because I know my union were misrepresented. We were
3 misrepresented because of extravagances and misappropriation of
4 funds. With that said, I want to also let you know, I am a
5 steward in the union. As a steward, I find myself as a
6 front-line fighter in a war.
7 For example, when you have a brigade, you send one to
8 the front line, the first brigade. I am that one. I am
9 playing both offense and defense on the job site. I do not
10 have a place where I can come and get my questions answered in
11 regards to the foreman which is supervising the job site for
12 management which is the company.
13 Mr. Walsh has made it clear that he's going to help us
14 in this regard which, of course, things are being done now but
15 all before then it has been a stumbling block.
16 The third thing I would like to know is if the UBC
17 could admit every single matter that affects us conspicuous,
18 which makes it available for us in advance before any decision
19 is being taken. If there is going to be something, for
20 example, an application for hiring someone, if there is going
21 to be a change of venue, if there is going to be a dismantle of
22 unions, I want that to be told to us and how it is being told.
23 There are certain things going around, for example,
24 unions like 395 going to come and replace ours. When are we
25 going to be actually been told about 395? It is an ongoing
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1 issue. We have been hearing rumors about it. We read about
2 it. What is it all about? I need to know.
3 And so I want to thank everybody for my cooperation.
4 MR. KELTY: I'll be brief. I would like to ask
5 permission to address the court. I didn't sign the paper.
6 THE COURT: Your name?
7 MR. KELTY: Just a couple of things. Gregory Kelty.
8 We have no representation on this collective
9 bargaining agreement, and I've asked both Mr. Spencer and
10 Mr. Ballantine about that, and neither one of them has given me
11 answer except to say we are going to negotiate the contract for
12 you. I would ask the court if they could appoint some of the
13 rank and file members to represent us in this collective
14 bargaining agreement.
15 We're going to have the elections hopefully soon for
16 the new delegate body which Judge Conboy said there is going to
17 be new duties of the delegate body. Now, none of us want the
18 delegates to be employees of the District Council, but if their
19 duties are going to be so all encompassing, I believe they're
20 going to have to be compensated one way or another and we
21 should know that.
22 Thirdly, we have trustees for our benefit funds. One
23 of them is on a leave of absence. The other is one of the dock
24 builders, and the other three are members of the international.
25 So essentially we have one member from the rank and file that
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1 is a trustee for our benefit funds, and there wasn't
2 representation from the men here in New York City. I think
3 that needs to be addressed.
4 One other thing has been overlooked. We have what
5 they call an international agreement for contractors in New
6 York City. What this is, the contractors come in and they
7 could bring in two guys before they get anybody from the local
8 union or from our District Council off the list. Now, with
9 many of these guys will tell you, they come in with two guys,
10 and the next thing you know, they have three or four.
11 I think the scanning thing is great idea for the
12 benefit funds. You can have one company having 20 or 30 guys
13 working in the city with absolutely no shop steward, nobody
14 verifying their hours or anything like that.
15 And so I think there needs to be something done with
16 this international agreement so somebody can be verifying the
17 hours. I think they need to check their benefit funds for
18 these guys that work under the international agreement to find
19 out if there is any overtime being registered for these guys.
20 There was a lot of these contractors who work under the
21 international agreement are kind of shady, to say the least,
22 and most of these guys will tell you that, too.
23 That being said, I thank the court for your time and
24 see you later.
25 THE COURT: Thanks.
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1 MR. CORRIGAN: Good morning, your Honor. John Patrick
2 Corrigan. I am a 31-year member, a second generation
3 carpenter. Three gentlemen they had negotiating our contract
4 right now have no transparency to New York City. Both of them
5 are out-of-towners from New Jersey and one is an international
6 president. Three of them have no loyalty to the members of
7 this local or this District Council.
8 The delegate body as of last year was 91 members. 82
9 of them were employees of New York District Council Carpenters
10 and their checks weekly were being signed by Michael Ford.
11 They did not represent the membership. They represented the
12 best interests of that building on 395 Hudson Street.
13 You can't have that. We need representation of the
14 membership. If you're an employee, you are going to do what
15 your boss tells you to do. That is what was going on here for
16 many years.
17 There is a lot of things that have to be changed. We
18 are going in the right direction with Mr. Walsh. Mr. Walsh has
19 done a great job in the little time he has been involved. The
20 gentleman before him was asleep at the wheel and the gentleman,
21 Mr. Mack before him did an excellent job, too, but they got rid
22 of him because he was doing his job. When you do your job,
23 they try to get you out by making propaganda.
24 I, as a member, have been in trouble, have done wrong
25 and understand that I should pay the consequence, and I did and
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1 I can look you straight in the face and say I have been on both
2 sides of it. I have no shame. I did what I did and I paid the
3 consequences, and I think a lot of members like Mr. Walsh and I
4 will say you made mistakes. Your Honor, you just move on. You
5 learn from your mistakes.
6 I think the administration you have with the R0 and
7 everything, they are giving the guys the opportunity to admit
8 their wrongs and let's move forward. The past is the past.
9 You learn from it and you have to move forward.
10 We have got to fight a lot of things, we have to fight
11 this. Our international is not looking out for the best of us,
12 not looking out for the best of broad picture, maybe corporate
13 America, but not doing me a service. They're just not -- just
14 don't got it. They don't get back to us any answers. You send
15 e-mails and you don't get no response.
16 They don't understand that without us, the contractor
17 ain't going to survive and they don't think about it. It is
18 all about the contractor, contractor. Without the members, the
19 contractor -- you need a membership, well trained, skilled
20 member and the contractor can do fine and they have done fine.
21 If you look in that council, there is many contractors, 30, 40,
22 50 years been around, so obviously the membership was doing
23 something right.
24 Our leadership has been -- it is going to be that way.
25 They were getting paid by Mr. Ford was signing their checks.
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1 How could they tell him now you're wrong on this? They don't.
2 They put food in their table for their families. It put them
3 in an awkward position. If you talk to them on the side, it
4 was just a scam. That is what we are dealing with. We are
5 dealing with people coming in there trying to sell us a bill of
6 goods. We know the bill of goods is no good.
7 Thank you very much.
8 THE COURT: All right. Here is what I would like to
9 do. Did anybody want to respond to any of that that you've
10 heard, any of those comments?
11 Mr. Torrance?
12 MR. TORRANCE: I just had a few comments to follow up
13 on some of the things said by the members and otherwise.
14 First of all, on the bylaws issue, the government has
15 benefited quite greatly from the input of the members. So as
16 an aside, the particular example of that over the years has
17 been Gene Clarke who spoke here today, and he deserves an
18 enormous amount of credit for the anti-corruption. I don't
19 know if we said that on the record before, but I think it needs
20 to be said.
21 So in response to what he said and in response to what
22 Mr. Cary said about input, and without making any
23 representations on other parties, what they will agree to, the
24 government would like to at least consider an open review and
25 comment period for the members. So we will explore that before
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1 they take effect.
2 THE COURT: That is a good idea. How would that --
3 MR. TORRANCE: We need to work out the details. I
4 have not talked about that with either the review officer or
5 UBC or UBS's counsel. It seems if we were able to reach
6 agreement by early May, as Mr. Walsh suggested, we could then
7 seek comment from there.
8 A few small points. Mr. Clarke mentioned the Callahan
9 reports and unsealing those. The government has already begun
10 to review those reports and the reports of Mr. Mack that are
11 also under seal with an eye to attempting to unseal them in the
12 public interest and in the interest of the members of access to
13 courts and access to these proceedings.
14 It has been a slow process. I regret that. We're a
15 little under-resourced, but we will continue that process with
16 that aim. I think that is all I wanted to mention.
17 Thank your Honor.
18 THE COURT: What do you suggest as a next date for us
19 to get together?
20 I am, among other things, as you point out, Mr.
21 Torrance, I am also struck by this request or the need for
22 there to be openness in this process. So I think that your
23 suggestion is a good one. I would like to hear a little bit
24 more about that specifically what you all have in mind in that
25 regard at our next court conference.
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1 I was going to suggest -- well, what do you think,
2 mid-May? That is what, early May?
3 MR. WALSH: Judge, I would write the court on or about
4 May 6th if there is either agreement or disagreement on any
5 aspect of the bylaws and distribute that correspondence to all
6 of the parties. If there is disagreement, obviously the veto
7 provision and the processes associated with that would follow.
8 As I referenced earlier, I believe that veto would be
9 fully documented by the middle part of May. I also remain
10 optimistic that the conversations that we will have, and that
11 includes the meetings with the parties during that period, will
12 be productive and we will be able to make to reach an
13 agreement.
14 THE COURT: I hope, so, too. Also Mr. Torrance's
15 suggestion about coming up with some structure for an open
16 comment period or something of that nature, you would do that
17 also?
18 MR. WALSH: Yes, I fully concur with Mr. Torrance's
19 suggestion about a comment period should an agreement be
20 reached by May 6th.
21 THE COURT: Judge Conboy, did you want to comment?
22 JUDGE CONBOY: I am comfortable with that, Judge.
23 THE COURT: Let's say, why don't we schedule another
24 court appearance, conference, whatever these are. I think it
25 is very helpful, and I was going to suggest Monday, May 16, at
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1 1:00 o'clock. And so by that time we'll have heard probably
2 from Mr. Walsh and you'll be able to report where things stand
3 in terms of all these issues that we discussed today and we'll
4 then take up the issue of the comment period as well at that
5 time. If that is suitable, okay?
6 Let's say May 16, at 1:00 o'clock, and thanks very
7 much. Good to see you all.
8 (Court adjourned)
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