1 1 1 2 2 3 4 4 5 5 6 6 7 7 8 8 9 9 10 11 11 12 12 13 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 24 25 16sddisc Conference UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA, Plaintiff,

v. DISTRICT COUNCIL OF NEW YORK CITY and VICINITY OF THE UNITED BROTHERHOOD OF CARPENTERS and JOINERS OF AMERICA, et al., Defendants. ------------------------------x New York, N.Y. June 28, 2011 2:30 p.m. Before: HON. RICHARD M. BERMAN, District Judge APPEARANCES PREET BHARARA United States Attorney for the Southern District of New York Attorney for Plaintiff BY: BENJAMIN TORRANCE Assistant United States Attorney WEISS & WEISS LLC Attorneys for Michael Bilello BY: SCOTT A. WEISS SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 90 Civ. 5722 (RMB)

2 16sddisc 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 23 24 25 Conference APPEARANCES CONTINUED FITZMAURICE & WALSH, LLP BY: DENNIS WALSH Review Officer - and MINTZ LEVIN Attorneys for Review Officer BY: BRIDGET ROHDE LATHAM & WATKINS Attorneys for UBC KENNETH CONBOY WILLIAM RECHLER NATANIEL KALE DeCARLO, CONNOR & SHANLEY, PC Attorneys for District council BRIAN F. QUINN McELROY, DEUTSCH, MULVANEY & CARPENTER, LLP Attorneys for Intervenor General Contractors Association BY: MARK A. ROSEN CARY KANE, LLP Attorneys for Carpenters Committee for Democracy and Workers Rights BY: LARRY CARY ANDREW M. KATZ RAYMOND McGUIRE ELIZABETH O'LEARY Attorney for Trustees of the Benefit Funds BISCEGLIE & DeMARCO, LLC Attorney for John Holt BY: ANGELO R. BISCEGLIE, JR. MARK I. SILBERBLATT THE SEGAL COMPANY BY: JOHN URBANK

SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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3 Conference THE COURT: Nice to see you all. Please be seated. So just a couple of preliminary remarks and then we'll get started. We have a pretty ambitious agenda today, which is to have essentially a series of reports of status on some rather critical areas. One relates to the funds, another relates to the status of the provisions of the bylaws, the another to the restructuring plan, another to negotiations with Wall and Ceiling, and in relation thereto to work rules, and then lastly the election schedule. So that's a lot -- that is a mouthful. And from my point of view, I am going to try and devote this following rough timeframe: A half hour to the first topic, 20 minutes to the second and third, and then 10 each to the fourth and fifth. And then we'll be able after that to hear from people who haven't spoken. Sometimes we get a little casual here and the discussions are interactive. Today is not one of those times. So if you want to talk among yourselves, there is an overflow courtroom on the ninth floor where you can observe these proceedings; that's the place to be. But here we are going to focus on covering this agenda. So with that, we could -- as you know, in correspondence and orders and at the last two conferences we discussed this issue about the status of the funds. I would SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 16sddisc

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4 16sddisc Conference like to start with that. I am happy to hear from lawyers, but as I've indicated to you, I'm also very interested in hearing from financial people. I understand there is someone here from the Segal Company; that would be Mr. Urbank. So I would be happy to hear from you directly on this topic, if you will. I don't know, Mr. Walsh, if you want to kick off this subject. MR. WALSH: Judge, I have had the opportunity to speak in advance of the conference with John Urbank. I could think of no one better to address the Court's concerns than Mr. Urbank, who is an expert and who works closely with the trustees of the benefit funds. And if I could suggest that Mr. Urbank be allowed to give the Court and everyone gathered today an introduction sort of a summary, and then he will make himself available to answer specific questions that the Court may have about the condition of the various funds. THE COURT: OK. Mr. Urbank, you are welcome to do that from the podium, if you prefer. That might be the most convenient place. MR. URBANK: Your Honor, I'll start off with the Pension Fund. THE COURT: You might just tell us, Mr. Urbank, the relationship of your company to the funds. You are a consultant actuary. MR. URBANK: Segal Company is the consultant and SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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5 16sddisc Conference actuary to the Pension and Welfare Fund. We have been so since 2000. I myself am the benefit consultant, and we also have the role of actuary and health benefit analyst. THE COURT: Are you principally accounting financial background people or -MR. URBANK: Financial people, enrolled actuaries, underwriters, etc. THE COURT: OK. Thanks. MR. URBANK: OK. On the Pension Fund, we're obviously required to do annual valuations of the Fund, the last one being done was July 1, 2010. That is the Fund's fiscal year. Based upon the requirements of the Pension Protection Act, the Fund's funded status was 81.9 percent. The Fund took advantage of the pension relief provision that is looking at the losses for -- investment losses, that is, for 2009 and '10. We're to amortize those using the asset valuation method over 10 years and the 29-year amortization under the funding standard account. Those were permitted by the Act. As I said, the Fund status is neither endangered nor seriously endangered nor in critical status. Therefore, it is in the green zone based on the funded status. We have done projections for the Fund, taking into consideration the current employment levels, and the Fund is projected to continue to be in the green zone for at least ten years. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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6 Conference THE COURT: And how about the size of it? MR. URBANK: Pardon me? THE COURT: What is the size of the Fund? MR. URBANK: In excess of $2 billion in assets. THE COURT: OK. MR. URBANK: OK. On the Welfare Fund, annually we provide the trustees with our financial experience and budget projection report. It's a tool for the trustee to evaluate the current financial status and future status. It shows both historical results as well as projected results. The basis of the projections are assumptions that we work with with the trustees. And the more recent ones that we have done, the assumption for man-hours, was based on 16 million. That was to reflect the decline of employment in the industry. In terms of expenses, we basically used those that occurred in the past and used normal underwriting requirements to project those expenses. The projections show that based upon the assumption of 16 million man-hours and the current contribution rate of $11.25, that the income would not be sufficient in the projection period primarily because of the benefit expenses do reflect inflationary trends ranging from 3 percent up to 10 percent, based upon the different benefit levels; particularly the higher percentages are for hospitalization and medical expenses and prescription drug SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 16sddisc

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7 16sddisc Conference expenses. As a result of those projections, there are deficits projected in the current fiscal year and in future fiscal years, which will result in a decline in the assets of the Fund. Again, we reflect no increase in the contribution income. So you have increasing expenses and a flat level of income, and, primarily, it is a tool that allows the trustee to review it and take any action, if necessary. In the past, the hours of the Fund have been in excess of 20 million hours before, and clearly that would result in a better outcome for the Fund. THE COURT: You say now it is 16? MR. URBANK: For the fiscal year ended 2010, I believe it was 16.7 million, and on that basis we used 16 million going forward. Obviously, we rely upon the trustees' advice, as they know the issue better than our firm. THE COURT: And what is the size of this Fund? MR. URBANK: The net assets of the Fund are about 225 million. That would include reserves for incurred nonreported claims. Without those, it is roughly $180 million. THE COURT: And you referenced that the Pension Fund is in the green zone, as it were. Where is this Fund? Is this Fund in more difficulty, or what? MR. URBANK: No. Under the requirements of the Pension Protection Act, there are basically three zones -SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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8 16sddisc Conference endangered, seriously endangered, and critical. If you are in none of those, you are considered in the green zone, which basically means that your funded status is above 80 percent and you do not have a projected funding deficiency. THE COURT: Where is the Welfare Fund? MR. URBANK: The Welfare Fund does not have similar funding requirements. THE COURT: So I'm trying to figure out health wise or viability wise where the Welfare Fund stands. MR. URBANK: The Welfare Fund has approximately -- the last report to the trustees indicated the Welfare Fund had reserves of approximately 11 to 12 months. THE COURT: In practical terms, what does that mean? At the end of that time period, it has no money? MR. URBANK: That's basically looking at the assets of the Fund relating to the next -- following years' projected expenses if there was no income coming into the Fund. Obviously, there is income coming into the Fund. With no action either by increasing contribution hours or increasing the contribution rate or, conversely, some modification perhaps to control expenses over a longer term period, perhaps two to three years, the Fund's assets would decline. THE COURT: OK. Is that it? MR. URBANK: That's it. THE COURT: OK. So could we talk a little bit more SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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9 16sddisc Conference about the Welfare Fund. I think there has been some discussion at some of our conferences, or hearings, that the Welfare Fund -- tell us a little bit more about the Welfare Fund, what it pays for, so to speak, and what its viability is and what is projected. MR. URBANK: The Welfare Fund provides a very rich benefit program of hospital, medical, prescription drug, dental optical, disability, life insurance for active members and their dependents. In addition, it provides similar benefits for retirees who meet the eligibility requirements, beginning at age 55, and extends throughout. There is benefits for surviving spouses. So it is a full range of benefits. THE COURT: And what is the significance of the fact that there is reserves at this point of 11 to 12 months? MR. URBANK: Each year we measure the Fund's reserves to give the trustees a sense of what the future funding requirements are. Based on our experience in this economy, reserves of a year are favorable. THE COURT: So that is a good thing? MR. URBANK: Yes, sir. THE COURT: And what, if anything, is proposed to happen with this Fund to make sure that it remains viable in light of some of these factors which are less favorable -economics, for example? MR. URBANK: Well, if the economic recovery would SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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10 16sddisc Conference work, with increased hours, that would definitely be a benefit. Through collective bargaining, the contribution rate could be adjusted. On the other side, expenses can be controlled by various changes to the benefit structure, either by increasing the cost sharing with the participant or changing some funding arrangements with the vendors. Unusually in these types of circumstances, we find that it is a multi-faceted approach to address this situation. THE COURT: And is there discussion about that now, and how -MR. URBANK: Yes. Throughout my tenure with the board, we have continually had discussions on what can be done. Recently, we have proposed, based on their request, various plan modifications that could made under the individual benefits, such as the hospitalization and medical, the prescription drug. We've reviewed some funding arrangements with the vendors. So a series of alternatives and modifications have been presented and discussed with the board. THE COURT: And what is your assessment of the Fund? I think you mentioned just a minute ago, you think -- I'm trying to figure out where it stands vis-a-vis maybe other funds of similar purpose and, you know, in other parts of the country. MR. URBANK: I think, depending upon the economy, if SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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11 16sddisc Conference work does not rebound to provide more contribution hours to the Fund or other income is not provided to the Fund, then benefit changes would probably be required, or some modification in size to reduce the projected outbreak in deficit. Additionally, the Fund retains investment consultants who invest Fund assets in various equities and fixed income instruments that provide income to the Fund. We, on a company policy, do not produce in our projections the expected investment gains or losses. We only use as an income source dividends and interest. I can tell you that recently, based on information provided by the Fund office, through April the Fund has experienced some investment gains which would modify the deficit. However, being at the end of June and changes have occurred, I don't have an update on that. THE COURT: So what is the deficit that we are looking at right now? MR. URBANK: The deficit projected for this year was, I believe, $44 million. THE COURT: And that would be through July. MR. URBANK: That would be projected through June 30, 2011. As I said, that does not reflect any unrealized or realized gains on investment, which to date I don't know the exact number, but as of April it was in the $30 million range. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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12 Conference THE COURT: The gains were? MR. URBANK: The gain, yes, sir. THE COURT: Fair enough. MR. URBANK: That was projected through the end of the year, what that gain might be. THE COURT: So do you net the gain in this instance from the projected deficit? MR. URBANK: It is ultimately realized at the end of the fiscal year. That would reduce the operating deficit. THE COURT: To $10 million dollars if those -MR. URBANK: If those numbers were reached, yes. THE COURT: Are those numbers ballpark numbers, in your opinion? MR. URBANK: Through December, the numbers in terms of the actual result, the cash flow result to the Fund, we're tracking close to our projections. I think through April the investment return was greater than what it was at the end of December. THE COURT: And what does it mean to be in deficit status with a fund like that? I mean, how do you make up the deficit, as it were? Let's say that -MR. URBANK: If in any particular year as a result of expenses exceeding your income from normal contributions and investment return, a deficit is incurred, it reduces your net assets. It is an ongoing concern. So the following year the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 16sddisc

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13 16sddisc Conference only way to make up the deficit would be if your income is increased to offset the projected expenses for that year and you had an operating surplus, and then you get back to balance. THE COURT: But if you don't have a surplus? MR. URBANK: The deficit is reduced to net assets. THE COURT: It is a deduction from the net assets? MR. URBANK: You reduce it from net assets, yes. THE COURT: So from the 225 million, or whatever? MR. URBANK: Correct. THE COURT: I see. Could you tell us a little bit about the investment of both the Welfare Fund and of the Pension Fund, starting with the Welfare Fund? MR. URBANK: I'm not an investment consultant. They retained an investment consulting firm, who then hires investment managers to place their assets. Segal has no involvement with that. THE COURT: I see. And so what is Segal's, so to speak, current -- I want to use the word "advice" but it is not really advice. What is your -- if you took a snapshot of the Welfare Fund at this point in time, how would you assess its prospects? MR. URBANK: As I said, without a rebound in contribution hours -THE COURT: Meaning the economy? MR. URBANK: The economy. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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14 Conference -- with more contribution hours or higher contribution rate on the income side, then to balance the Fund, expenses, some modifications, or a combination of both would be needed to adjust for the deficits and to sustain the long-term viability of the Fund. THE COURT: And in making that assessment, does your company, or where do you turn for an assessment of where things are going in 2011, 2012, in the economy, for example? You must at this point be looking forward, because you are almost finished with the fiscal year. MR. URBANK: We look forward -- we primarily, as I said earlier, the contribution requirements, we rely upon the trustees' advice to let us know what they believe the contribution income may be, how the work of the Fund might be going forward. On the expense side, which is really the part where we're looking forward as to what we expect, we use national trends to determine what the expectation is for future benefit costs. Obviously, those are -- we do a national survey, our organization. Additionally, we looked at what the funds' actual experience is year over year, what the change in demographics might be to determine -- and, again, past historical costs -- to determine what is expected going forward. But we tend to be somewhat conservative and we look at what industry trends are, and in this day and age, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 16sddisc

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15 16sddisc Conference inflationary trends for medical benefits are in the 9 to 10 percent range. THE COURT: I take it, you probably look at also a regional picture as well? MR. URBANK: We do. For a group of this size, we tend to look at the Fund's own experience as well as what is -- you know, their type of contracts, whether they use preferred provider networks and the discounts that are then inherent in determining what the cost might be to the Fund. THE COURT: If you could return for a minute to the Pension Fund. How are the economics of the Pension Fund, how is that funded, as it were, as compared to the Welfare Fund? It must be different. MR. URBANK: The Pension Fund also is obviously funded by a contribution rate and the contribution work hours. Additionally, a large component of funding the pension plan is based upon investment return. For funding purposes, we use a 7-and-a-half percent investment return assumption. The Fund's typically -- the Fund's investment philosophy for the Pension Fund is different than a Welfare Fund, where on the pension side they have more investment in equities, which can generate better returns, depending on the market, obviously. We utilize the standard actuarial methods, and it is a long-term funding that we use for projections. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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16 Conference THE COURT: And if you could tell us just for a moment how are each fund, that is to say, the Pension Fund and the Welfare Fund, doing in 2011 as compared to how they have done historically, if that is something you can respond to? MR. URBANK: The Pension Fund is, as I said earlier, evaluated annually. So changes that occur during the year we don't really annualize, because it's based upon pension credits earned during the course of a plan year, and that's not determined until the end of the year. The only thing that is reported -- and not by us, by the investment consultants -- how the investments are running for the Fund on a fiscal year-to-date basis, based on the last report that I heard, the investment return has been favorable. THE COURT: That's with respect to -MR. URBANK: To the Pension Fund and, as well, to the Welfare Fund because as I said earlier, the Welfare Fund is experiencing investment gain this year. THE COURT: And the last question that I have about each of the funds, and you touched on this already: We had some discussion here about threats, so to speak, to the viability of these funds. What do you see in that regard? Is that too dramatic a term to apply, or is it -MR. URBANK: I think the projections to the Pension Fund are favorable, as I said earlier. We've -- based on the current assumptions, if they are reached, which takes into SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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17 16sddisc Conference account the demographics, the investment return, contribution income based upon a change in the contribution base, that the Fund is projected to be in the green zone for several years. If those assumptions are met, that's what we would expect. So we think the Fund is in excellent shape. The Welfare Fund, the projections are not as long as they would be for a pension fund. A reserve of one year for the size of this Fund is acceptable; it could be better. Again, we're faced with the downturn in employment that probably has the most impact on the Fund. THE COURT: And the rising health costs? MR. URBANK: And the rising health costs, and those, obviously, could be addressed through modifications to the plan if the board so decided. THE COURT: So that covers the issues I had. Did anybody want to comment on those two? MR. WALSH: Your Honor, I wonder if I could suggest that Mr. Urbank summarize for us all the information that the beneficiaries receive automatically from the Funds and the other information that they are entitled to receive if it is requested by them. MR. URBANK: The Fund -- the Pension Fund, annually the Fund distributes an annual funding notice which replaces the summary annual report. That's provided 120 days after the beginning of the plan year. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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18 Conference THE COURT: So when was the last such notice? MR. URBANK: That would have been mailed last September, and that is a new requirement with the Pension Protection Act. THE COURT: That is an actual mailing to one's address? MR. URBANK: Yes. THE COURT: And Mr. Walsh raises a good point. What is in that notice, so to speak? MR. URBANK: It indicates the funded percentages of the Fund. It tells us what their assets are over the last several years. It indicates what zone the Fund is in, whether it is in the critical zone or an endangered zone. As I said, this Fund is in neither. It also indicates what the minimum pension benefits would be under the Pension Benefit Guarantee Corporation. When a new participant comes into a plan, whether Pension or Welfare, they are provided a summary plan description, which provides all the benefit information. If changes occur during the course of the year, they are provided a summary of material modifications. They have access to, upon request, to the Form 5500 for both funds. THE COURT: Meaning? MR. URBANK: It's a document that is provided through SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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19 16sddisc Conference the Department of Labor, the government. They can request that as well as the pension valuation, and the Fund's financial statements. THE COURT: So is the same true for the Welfare Fund? MR. URBANK: For the Welfare Fund, rather than an annual funding notice, they receive a semi-annual report which gives them basic information on the assets of the Fund and the income and disbursements. They also receive a summary plan description, summary of modifications when changes occur, and, again, they also have access to request the Form 5500. THE COURT: So, typically, the summary plan description is a document that is provided at the beginning of one's employment, right? MR. URBANK: At the beginning of one's employment, and, typically, with changes, they are republished every five years to give the participants the most current benefit levels. Any changes that occur in the interim, a summary of material modifications are provided that effectively wind up in the summary plan description. THE COURT: And in both instances, these documents -the annual notifications are mailed to the plan participants? MR. URBANK: Yes. THE COURT: And is there a possibility, or is there a provision already that these plans could be online somewhere, on Mr. Walsh's website, or something like that, or not, or are SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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20 16sddisc Conference they on the District Council's website? MR. URBANK: They are on free ERISA. They have access to that information. There may have been discussions to put some of the other information on the website but I don't know that for sure. THE COURT: OK. So, now, if somebody needed additional information, what would they do? They would make a phone call or -MR. URBANK: They could contact the Fund office. The Executive Director of the benefit funds is normally on all mailings. They give the telephone number, the address. They could contact him either by phone or by mail. THE COURT: Who is that person, if you know? MR. URBANK: Currently, it is Stuart GraBois. THE COURT: How do you spell that? MR. URBANK: G-R-A capital B-O-I-S? THE COURT: And he is where? MR. URBANK: He is at the Fund offices at the Carpenters' building. THE COURT: Which is? MR. URBANK: 395 Hudson Street. THE COURT: Great. Did that answer your question, Mr. Walsh? MR. WALSH: Yes, your Honor. THE COURT: Anybody else? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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21 Conference MR. McGUIRE: Your Honor, Raymond McGuire, representing the Carpenters Funds. I think Mr. Urbank has given a comprehensive portrayal of where the funds are and what their status is. I would like to, however, supplement his remarks with the concerns that have been expressed to me and to other professionals about the situation with the Welfare Fund. THE COURT: OK. So we're just at the halfway mark. If you want to just take a minute or two to express those concerns? MR. McGUIRE: Very briefly, your Honor. THE COURT: We could double back later, but this would be a good time. Yes. MR. McGUIRE: OK. Historically, the Fund has used an 18 million man-hour mark as the likely number of hours worked, multiplied by the contribution rate, gives you your income. At the 18 million man-hours, the Fund was always running a deficit. But historically, over the last ten years, there have been 20 million hours worked, almost 24 million in 2008. We are down now not just to 16 million hours, we're projecting 15 million hours in the coming year. The trustees, as John said, are people who are actively involved in the industry -- general contractors, construction managers, specialty contractors, all dealing with the carpenter trades, as well as the carpenter officers SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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22 16sddisc Conference themselves. We all have a feel for where the industry is going, and we don't feel well about it. We're losing market share, as we speak. If we don't do something about becoming more competitive and increasing our revenues and becoming more realistic about the Plan and reducing expenses, in 2013 we will have exhausted our reserves. So that's what we're looking at and that is what we're grappling with. Thank you, your Honor. THE COURT: I don't quite get that. In 2013, you would have exhausted your reserves? We have reserves right now extending 11 or 12 months, right? MR. McGUIRE: That's right. If we had no additional income coming in other than what we have through the $11.25 an hour, if we have 15 million hours and -THE COURT: In what year? MR. McGUIRE: In '11/'12 and 2012 and 13, we will have exhausted our reserves. That's what we are concerned about, and that's what we are trying to come up with solutions to. And the solutions involve the district -THE COURT: You know what, that's very helpful. So we are at the half hour mark. Let's stop this for now and move to the next topic, and solutions is a good topic to come back to later. MR. McGUIRE: Sure. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

23 16sddisc 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: helpful. MR. URBANK: Thank you, your Honor. THE COURT: So, the bylaws. Status of revisions to the bylaws, Mr. Walsh, is that something that you can help us with? MR. WALSH: Judge, as we contemplated at the last conference, there was a comment period of 30 days, and I received approximately 60 detailed written comments from members as well as correspondence from counsel. THE COURT: During the comment period? MR. WALSH: During the comment period. And as we contemplated, I then met with counsel for the UBC. We met last week and had a further discussion. They were, by the way, provided with the comments so they had the benefit of the insight of the members. I can characterize the discussion as, again, helpful. It certainly moved the process forward. I will say this, that the Stipulation and Order contemplates that certain amendments occur at a very low level, that the bylaws be amended to comport with the Stipulation and Order. That has been meant; there is no question about that. The process that we have been involved in is, collaborative, to try to do better than that, to try to craft bylaws which will serve the District Council in a post-election SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Conference Great. Thanks very much. That was very

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24 16sddisc Conference era, that will shore up the infrastructure of the union. And we have made progress in that regard. We will likely have another draft produced shortly. And at some point we may collectively decide that the union thinks they've proffered a good document. I may agree. I may think that there is a bit more that can be done, where I might use my recommendation authority under the Stipulation and Order to formally recommend that the union consider certain improvements, which they can accept or reject, as contemplated by the order. And at that point I would have the option then, if I felt it appropriate, to file a motion and put it before the Court as to whether that improvement should be made. I'll certainly defer to counsel for the UBC if you want to add to that at this time. THE COURT: Before we do, we should say a couple of things here. Some people -- I know you have and I know I have in chambers -- have gotten some requests to extend the comment period. I think you thought, and I think appropriately so, that we should move the process along and so that there was no basis for that, and since so many people had commented within the formal comment period, that it was appropriate to just keep going. Is that right? MR. WALSH: Yes. And we actually got to the point in reviewing the comments that we had received that there was a certain redundancy in the hot-button issues, for lack of a SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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25 16sddisc Conference better phrase. And I think we have received the very great benefit of insight from members who obviously spent a lot of time parsing through these proposed bylaws, as well as the contributions from counsel who weighed in. So I think it is probably diminishing returns. I also held a town-hall type meeting last week, which I called an hour forum. And in the notice I put out, I specifically invited members to come and comment on the bylaws as well as the restructuring proposed by the UBC. And that was attended by about 200 members, and we also put in the notice that the meeting would be recorded. And that should it please the Court, I would make that recording available to the Court and to the parties, if it was requested, and I have audio recordings of that event. So there has been in that event an additional opportunity for a great many members to speak, some in some detail, about their feelings on both of those subjects. THE COURT: And, Mr. Walsh, could you tell us about how people were able to obtain a copy of the bylaws or the draft that was being considered? Were they made available online or -MR. WALSH: Yes. The comment version was posted on the District Council website, and I assume there were additional private websites. I know for a fact there was one popular private website where it was also posted. So I think SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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26 16sddisc Conference there was a fairly good but cost-efficient distribution for those who chose to inquire. THE COURT: Mr. Conboy, did you want to speak? MR. CONBOY: Judge, I just wanted to express the appreciation of the UBC to Mr. Walsh. These discussions have been very constructive that we have had. We have had a large number of comments from a whole variety of sources. I think they have been given an exhaustive and fair review by Mr. Walsh and by our team. And it is my hope and expectation that it will not be necessary for Mr. Walsh to go into a process of making formal additional recommendations. I can't say that flatly because we still have a relatively modest number of matters to work through. But I do think that the bylaws, in terms of reforms and changes, are very substantially improved now, and that in the relatively small number of additional issues that we were working through with Mr. Walsh, I am optimistic that we can resolve those quite quickly. THE COURT: Very good. What is your expectation, approximate, of a timeframe for further discussions, another draft, or the like? MR. WALSH: Well, with respect to the draft, I know that Latham Watkins is working diligently, as they always do, to turn the document around, and I would leave it to Mr. Conboy to inform the Court. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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27 Conference MR. CONBOY: No more than ten days, Judge. THE COURT: To reflect what's been agreed to and discussed so far? MR. CONBOY: Yes, and hopefully conclude the dialogue with the officer. THE COURT: Is it that document, the document that will be produced in ten days, that will be -- will it incorporate all your -- not all your points, but your concerns, or will it be that document that is subject to further discussion between you and the Council? MR. WALSH: Certainly, the union reserved the right to say we've gone as far as we think we can go. They are in some respects constrained by a lot of bylaws that they use in all the jurisdictions nationwide. They do recognize the uniqueness, however, of the situation in New York, and they have made an attempt to address the unique problems reflected by the corruption in New York. And they need to shore up the bylaws in a unique way. But I think we are getting to the point where, if necessary, we can agree to disagree, both sides understanding why the other side has taken a particular position. THE COURT: So that's pretty good, Mr. Conboy. In terms of the timeframe, I would imagine, in the next, I don't know, couple of weeks or so you would probably be where you are heading? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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28 Conference MR. CONBOY: Yes. THE COURT: Right? MR. CONBOY: Absolutely, Judge. THE COURT: What is your goal about an end day, so to speak, for the bylaws? Let's assume two things. First, no motion practice, let's assume that you and the officer conclude something that you both agree to; when might that happen? MR. CONBOY: Well, I would expect at that point, your Honor -- I don't want to speak for Mr. Walsh, but I would think that under the procedures that are set out in the Stipulation and Order, that Mr. Walsh would hopefully be in a position to say that here is a set of revised and reformed bylaws that the UBC and the Review Officer have reached full agreement on and we now submit them to your Honor, and presumably at that point there will be a question as to whether or not your Honor was prepared to approve them. Dennis, am I accurate in terms of the sequencing that you have in mind? MR. WALSH: Well, I think some of that is going to be left to faith. If there is an agreement, then from my perspective the paragraph 5.b process will have been concluded without the need for litigation or consideration by the Court. That obviously doesn't constrain anyone else from involving themselves or trying to involve the Court. But I think it's fair to say that in the next 30 days SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 16sddisc

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29 16sddisc Conference we will have a very solid view as to where they are, and we'll certainly be clear enough for people who either agree or disagree as to the actual document. I can also say that we are making progress -- and we will get to this on the writing of the election rules -- and I think everyone needs to be mindful that when we actually do install delegates and a new executive board in January, that there is a provision for further amendments of the bylaws, and the bylaws obviously need to be regarded as a baseline, that the people who govern the District Council will be able to make their own motions about how business is conducted, more in the nature of regulations than legislation. So people should remember there is that opportunity for democracy to implement changes at the pleasure of the rank and file members come January. THE COURT: Good. All right. Thanks very much. So the next topic I wanted to learn a little about is the restructuring. Who would take the lead on that? MR. WALSH: Well, just as a matter of procedure, which I know everyone is interested in, although the union did write a letter and send a letter to the Court, it was copied to the government and to me. And from my perspective, I view my obligation in this regard as a paragraph 5.b review function. And I am undertaking that review right now. THE COURT: I see. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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30 Conference MR. WALSH: I am endeavoring to get answers to certain questions from the union. I have not encountered difficulty in getting answers to the questions. There was one immediate observation that I reported on in my second report about the obvious impact of man-hours for work performed by members of Local 1456 and Local 2287 and the Local 740, if their geographic jurisdictions were paired back. And I have posed those questions to the union, and I'm starting to get information as to how that would actually work so that it would not have a draconian, an immediate impact on the funds. We actually calculated the man-hours that would be at risk, and it's conservatively estimated, based on data that we got from the fund, of between 850,000 and a million man-hours per year if the geography of those three locals were just cut and those man-hours were not paid into the Fund. However, there is a process that has been described to me and referred to as reciprocal agreements, whereby if members of those unions continued to work in the geographic jurisdiction, those man-hours, those fringe benefit contributions would go back to the New York Fund at the rate of the Local collective bargaining agreement in question, which I understand would be less, whether it is New Jersey or in Suffolk or up county. So that was I think a bright line issue that struck everybody's eye, and we are working through that trying to SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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31 16sddisc Conference understand what the immediate and long-term impact on the benefit funds would be. THE COURT: So just so it's clear, you are now discussing or raising the topic of if there were a change in the geography of a local, for example, and in fact if it were limited to the five boroughs of New York, as opposed to exceeding that, that could, and the material suggests, have an impact on the viability or certainly the size and well-being of the various funds? MR. WALSH: It would -- I will give you an illustration, Judge. THE COURT: Yes. MR. WALSH: Local 1456, based on the numbers we saw, conducts approximately 36 percent of its work outside the five boroughs, and that's over 600,000 man-hours. So that if there was not some reciprocal arrangement with the jurisdiction or a phase-in, there would be an immediate impact over the course of 12 months that would be appreciable; it would be significant. THE COURT: Got it. So that's something that, as a preliminary matter, you and Mr. Conboy are discussing? MR. WALSH: And with the UBC supervisor and his people at the union. I will say that we have, as the Court has, received correspondence from a number of parties. There are many members who are very upset, and they were given an opportunity SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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32 16sddisc Conference to actually state the reasons for their feelings about the restructuring at the forum last week. And I am mindful of the emotional ties that members have to their long membership in these locals. I am also mindful, however, that this was done in 1997, and that there was a challenge to a restructuring, which is very similar in scope, back in 1997, and that as part of this case Judge Haight accepted the finding of the investigation and Review Officer. There was no issue created under the Consent Decree that the challenges, based on purported violations of the Decree, were rejected by the District Court. THE COURT: But it raises a good point. So maybe just for the record you could briefly identify what is the purpose of the restructuring? What is the restructuring seeking to accomplish? You mentioned one of the members are concerned, and rightly so, of the negative consequences that could ensue. But why do it in the first place? MR. WALSH: Well, there was a report prepared by one of the representatives who reports to the General President, Mr. McCarron, who cited economist of scale in combining the administrative functions of similarly-situated local unions as a cost-saving mechanism. I've also been told, anecdotally, that there has been problems in policing some of the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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33 16sddisc Conference jurisdictions in New Jersey and in other counties by sending agents from the New York City base and that work has been lost as a result of that. The UBC has also cited the historical inequity of having the New York City District Council's jurisdiction extend into areas like New Jersey, and under the UBC Constitution the General President is vested with authority to apply a national, or big picture, lens to, in his discretion, act in the best interest of the membership as a model. The theories have been tested, as I mentioned, back in 1997 here in New York. THE COURT: Sure. Mr. Conboy, anything you want to add to that? MR. CONBOY: Yes, Judge. I did want to say that the reference that Mr. Walsh made to the portion of the submission that we made to you is an analysis by Philip Newkirk, and that, of course, is available for your Honor to review. But I do want to say that the contributions on a very focused basis, particularly with respect to the dock builders issue, have been very helpful. The comment period just ended I believe yesterday or today, and I note, for example, that Mr. Bisceglie has filed a careful and extensive critique of certain portions of the restructuring plan. And I do expect, your Honor, that in consultation with Mr. Walsh, we will be reviewing all of the comments, and, obviously, that influences SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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34 16sddisc Conference Mr. Bisceglie's letter, and others, and we will remain open-minded with respect to the various concerns being expressed. This is, we certainly concede, an issue of very big moment for a number of many, many rank and file members. So my hope is that -- and I'm not entirely comfortable about giving your Honor a number of days, but as soon as we can give a comprehensive review of everything that's been said in the way of comment, Dennis and I and our teams would be working to narrow the focus of outstanding issues so that we can address them more definitively perhaps on the adjourned date that your Honor selects. THE COURT: And not unlike the process you are using with the bylaws? MR. CONBOY: Right. THE COURT: A similar collaborative process? MR. CONBOY: Right. I do want to just mention, Mr. Walsh was, of course, appropriately advising your Honor in terms of Judge Haight's decision. That matter was appealed to the Second Circuit. And the Second Circuit decision is -- let me not get into an argument about the impact of it, but there is, I think, a particular relevance of the Second Circuit's analytical approach to this. THE COURT: Good. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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35 Conference MR. CONBOY: Thank you, Judge. THE COURT: Thank you. I was going to ask you, Mr. Walsh -- I think maybe Judge Conboy has touched on it -- without pinning you down, what kind of timeframe do you perceive for this? I think it is somewhat longer than what's required to come up with the bylaws. MR. WALSH: Well, I can say, I think reasonably confidently, that I can finish my review, provided all my questions are answered, within the next 30 days. But I am just as subject to the efforts of persons, whether they be private members or local unions, who may choose to challenge the restructuring. THE COURT: Sure. MR. WALSH: But from my own perspective, I think I will get the answer and be able to wrap up the 5.b review within the next 30 days. (Pause) THE COURT: So we move to negotiations with Wall and Ceiling and what implications that might have for all of this. MR. CONBOY: Judge, obviously, this is a matter of some delicacy in light of the fact that the contracts expire on Thursday at midnight. But I do want to advise your Honor that on the 15th of June there was a very constructive meeting at Mr. Torrance's office with the Review Officer and with Douglas SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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36 16sddisc Conference McCarron, the General President, and Frank Spencer, the Trustee. Judge, we had a very constructive discussion with the government and with the Review Officer particularly with respect to giving a written proposal in connection with the broader and most critical issue, that is, the tension between the full mobility objectives of the employers as a trade-off for elimination of the 50/50 rule. In the course -THE COURT: Maybe you could just explain that a little bit more broader, what the issue is there. MR. CONBOY: Yes. The principal question, Judge, with respect to these negotiations are whether the constraints imposed by the Consent Decree, and particularly Judge Haight's order, with respect to free access to selection of members of the union for particular projects -- as you know, approximately one-third of those positions must be filled through an at work list. The employers have become increasingly concerned about the anticompetitive nature of that 50/50 rule. And, in fact, the reserve officer has commented in his report to the Court with respect to some broad and noted concerns -I won't characterize it beyond that. THE COURT: Sure. MR. CONBOY: -- that are fairly widespread not only in terms of his office but the industry on a growth basis. The hope is that a creation of a labor management SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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37 16sddisc Conference committee or corporation, as anticipated in Section 10(b) of Judge Haight's Stipulation and Order, with the sufficient involvement going forward of all of the concerned parties, that that might be successfully negotiated in the collective bargaining talks that address a contract to expire on Thursday. In the course of our meeting with Mr. Torrance and Mr. Walsh, we were asked for a written proposal, and we did indeed deliver that written proposal. And as a consequence of that subject, we have been in dialogue since then with respect to what might or might not be appropriately communicated to the employers during the course of these next critical days. THE COURT: I see. MR. CONBOY: So we were in contact with the United States Attorney and the Review Officer this morning in terms of some refinement with respect to the understanding of the U.S. attorney and the Review Officer. Obviously, Judge, they are not parties to or participants in the collective bargaining agreements, and we are mindful of our obligations in the course of this, because it is so critical. Everybody recognizes this is a critical factor, if not the most deciding factor, that will affect all -- that may affect all of the other terms of the contract as it emerges. So that, Judge, is about the maximum that I am comfortable in stating publicly with respect to the matter. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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38 Conference But these negotiations are fully engaged and quite intense, and the obvious hope is that an agreement can be reached before the expiration of negotiations on Thursday. THE COURT: And even if they weren't, I don't suppose the world would come to an end, because typically there would probably be an extension, or is the goal to actually have a new agreement by Thursday? MR. CONBOY: Well, I certainly can confirm, Judge, that the goal is in fact to have an agreement with Wall and Ceiling and with the other principal contractors, or the associations that represent the principal contractors, and then, as you know, there is a sequential process following that that hopefully would effectively replicate what's agreed to in the talks that are ongoing now. THE COURT: Got you. Mr. Torrance, did you want to state anything? (Pause) And on my agenda, the election is the last topic. How is that shaping up and timeframes and how, if at all, is that impacted by any of these other topics that we have been talking about? Perhaps not at all. MR. WALSH: Judge, I am very much dedicated to the proposition that we hold an election by December 15th; that preceding that local unions will elect delegates according to an appropriate ratio of representation in October, or no later SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 16sddisc

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39 16sddisc Conference than October, and that the EST, the executive secretary-treasurer, the president, the vice president elected directly by the members of the affiliated local unions be installed in January. And I believe that that objective can be achieved regardless of whatever ancillary litigation may or may not occur with respect to any other issue, whether it be restructuring or an outgrowth of that. We are making progress on finishing the draft rules for the election, and I am optimistic that we will be able to promulgate them in the latter part of July. And if we set, for instance, December 15th as our end date for the election, using the 120-day calculation contemplated in the election section of the Stipulation and Order, that would have set promulgation for August 15th. We can do better than that, knock wood. And I have also decided that the way to enfranchise the greatest number of carpenters is to have an all mail-in ballot, that there would be no direct in-person voting. We successfully ran a mail-in ballot component that enfranchised many members back in 1995. It was run by the so-called Triple A, the American Arbitration Association, who has a stellar reputation in this regard. It would be my plan to contact them and see if we can work out a contract for their involvement this time as well. And during the comment period that would follow, the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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40 16sddisc Conference promulgation of the draft -- the election rules, we would actually start the process of the gaining of signatures for petitions to establish eligibility for office, because the draft rules are contemplating that the union send mailings on behalf of bona fide candidates who accumulated a sufficient number of signatures as well as access to the Carpenter Newspaper and, now that we have the tool of the website, access to space on the website. And I expect the petition sequence to begin at or about the time that the draft bylaws are submitted out for comment. But I'm optimistic that all of the elements that are under my control can be achieved to reach the deadline of December 15th. And if it is possible, I would ask if the parties -- and Mr. Bilello was actually the movant in this regard, if we could actually stipulate here in court that there is no objection to setting December 15th as the date by which the mail-in selection will be completed THE COURT: That is a Thursday, is that right? MR. WALSH: Yes, Judge. THE COURT: And it is obvious, but you are saying it is an all mail-in election. So you mean the old-fashioned paper ballot mail in, or is there -MR. WALSH: There is a standard double-envelope system that they have been using with success for years. Previous, or SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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41 16sddisc Conference recent District Council elections have also used a mail-in component. And I think it's -- it is the best way to enfranchise the eligible members, considering that there are many, many thousands of members who live well outside the metropolitan area, and they will be able to consider the issues based on the mailings that they will get, based on the union newspaper and whatever individual candidate literature is sent to them, and then send their ballots in, after having made an informed decision. THE COURT: Got it. Did you want to respond. MR. CONBOY: Judge, I just want to reaffirm the commitment to the UBC to the election schedule that Mr. Walsh announced actually many, many months ago, which leads us to believe that it is entirely viable and realistic and we are behind it. THE COURT: OK. Why wouldn't it be an achievable goal? MR. CONBOY: We are -THE COURT: That was sort of a rhetorical question. MR. CARY: Your Honor, Larry Cary, for the Carpenters Committee. While we share the desire to move to an election, there is a lot of moving parts right now which the Court knows, obviously, as we've gone through the day. We're concerned about the restructuring and what does it mean. I mean, do SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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42 16sddisc Conference people get elected as delegates, the local get dissolved, transferred? How does that impact on the landscape? There are some pieces to this which have to be in place. There is some potential litigation which may come as a result of that. We're not interested in delaying it, but to stipulate to the date in the face of these questions is I think a bit much. THE COURT: Well, yes -MR. CARY: Aspirationally, we would love to have it wrapped up by December 15th. THE COURT: It seems to me -- and you all know these issues much better than I do, but some of these issues are going to remain a little bit amorphous, but, nevertheless, one could move and have an election, in any event. I mean, it is not entirely clear to me that everything is going to be entirely wrapped up and that the election has to wait for that to happen. MR. CARY: I would agree with the Court's expression. THE COURT: But it is a fair point that you make; there are a lot of moving parts. MR. WALSH: Judge, just to respond to Mr. Cary, we are in essence in that theory deferring to a phantom, something that has not happened. And I have not as a matter of record heard anybody in this courtroom say that there is a reason why, as the record exists now, this election cannot be scheduled by SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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43 16sddisc Conference stipulation for December 15th, and that the only thing that could alter that stipulation would be an order of the Court, if cause be shown, by as yet unnamed parties. THE COURT: Right. I think that is my perception of the consensus. I don't know if there is exactly a stipulation on the record, but I have never heard anybody complain that that's not doable or that's not desirable, and I certainly think that it is. So -- yes, sir. MR. TORRANCE: I would just add that -- Benjamin Torrance for the government -- that the government supports Mr. Walsh's approach. Obviously, a formal stipulation would be fruitful, that, as he said, there is nothing actually now on the record that would prevent the December 15th election. Mr. Walsh asked the parties to stipulate. The Carpenters Committee is not a party. Should they wish to intervene at some later point, that might be their right. But at this point we would agree to Mr. Walsh's stipulation. THE COURT: So who, Mr. Walsh, has to be party to such a stipulation? MR. WALSH: Well, certainly the District Council and the government. And, you know, the Stipulation and Order I think actually needs to be considered here. The precise language of it, because it does contemplate in paragraph 5K2, with respect to my obligation to promulgate rules, that I must propose rules SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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44 16sddisc Conference and procedures for the conduct of elections no later than 120 days before the first election during my tenure. And in the absence of a stipulation, there is no court order that actually sets that date. So I think by strict construction there would be no necessity or requirement, indeed, for me to promulgate these election rules, or perhaps even authority, without either a court order or a stipulation of the people who are party to the Stipulation and Order. THE COURT: Anybody else want to be heard on that? (Pause) MR. WEISS: I think I do. Scott Weiss, on behalf of Mr. Bilello, since Mr. Bilello put this ball in motion way back in January 25th. THE COURT: He did. MR. WEISS: Certainly we have been working towards the idea of having an election by December 15th. My only question is -- and maybe we are just arguing with a phantom -- what the timing would be as we go forward in addition to the 120 days, because there is a comment period, there is a give-and-take as to the 5.b period? Mr. Walsh has commented on the record here that he sees no reason that this election cannot happen in December. So barring litigation, or what the landscape would be, as Mr. Cary points out, I would be curious if Mr. Walsh and Mr. Conboy are confident that all the facets of the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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45 16sddisc Conference restructuring plan will be in place, and we would know what that landscape is so that the constituencies who are voting in that election know which locals they are in and who they are voting for. THE COURT: Sure. Mr. Walsh, do you want to comment? MR. WALSH: Judge, I would say that from the moment I give notice that I have completed the 5.b review, that the UBC would be at liberty to implement the restructuring in the absence of a litigation and a stay issued by the District Court. MR. WEISS: That is the answer. THE COURT: I think that is the answer. Mr. Conboy, did you want to comment? MR. CONBOY: No. I am in complete agreement with Mr. Walsh. THE COURT: Yes, sir. MR. CARY: It is a question as to my status, your Honor. If I heard correctly -THE COURT: You are in the green zone. MR. CARY: I wish I was, which is very good. I thought we were -- and perhaps I'm wrong, but I thought we had intervened into this motion, and, as such, I would expect that we are a party. We are not a party to the Consent Decree, obviously, just as Mr. Bilello is not a party to the Consent Decree, but he did make a motion; he is a party SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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46 16sddisc Conference to that motion. And if his agreement is necessary for a stipulation, I seen see no reason why our agreement is not necessary. THE COURT: I need to take a look at that as a legal matter. Anybody have a thought? MR. WALSH: Well, Judge, I don't see how it is possible that, with all due respect, that movants on the election question, that is a timing question. THE COURT: Right. Right. MR. WALSH: But they cannot band together to assume the role of a party to the Stipulation and Order, who actually agreed to this express language in the Order. THE COURT: Right. So your view, then, is that the date, for example, is set by stipulation between or among whom? Yourself and -MR. WALSH: The relevant parties, excluding the benefit funds, since they have no scope in this regard. So that would be the District Council of Carpenters and the government. THE COURT: Right. And all of whom are in accord that December 15th is the date, right? MR. TORRANCE: That is correct, your Honor. MR. CONBOY: Yes. And, Judge, obviously, the UBC through the trustee. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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47 Conference THE COURT: Sure. OK. I agree with that, actually. But I will still take a look at what has been submitted so I can see if it is -MR. CARY: I appreciate the Court's concern. THE COURT: You bet. MR. CARY: Thank you. THE COURT: You bet. So I think that as far as I am concerned, we are right on the money in terms of time. Anybody else on these five topics? I know we want to come back to Mr. McGuire for a minute or two. (Pause) No? Mr. McGuire, so you wanted to -- and I think rightly so, talk a little bit more about viability issues, and I'm happy to have you do that. And I would also, in that context, like to hear, if there are viability questions, what are viability proposals or solutions. MR. McGUIRE: Raymond McGuire, for the Carpenters Funds. I think perhaps it's been noted in this court that we've had 30 collective bargaining agreements expire this year. Most of them will expire on June 30, 2011. We have had some that have had successfully -- where successful replacement agreements have been negotiated, most notably between Master SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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48 16sddisc Conference Painters and District Council of Painters No. 9. And the industry -- and by that I mean the employer's side of the industry -- regards this as a watershed year. We've watched our market share erode steadily over the last 20 years. We probably now have less than 50 percent of market share in all five boroughs. We're doing better in Manhattan. We have lost virtually all residential work in the boroughs, where a lot of residential work is going on. And we've all addressed this in our collective bargaining negotiations. Every single association has said to its collective bargaining partner, we have to reduce labor costs by 20 percent if we're going to survive as a unionized industry in this city. And, for example, today the highrise contract just completed negotiations with Mason Tenders District Council Local 79. Agreed to a wage freeze -- wage benefit freeze in the first year of the agreement, 2 percent and 2 percent in the second and third year, a change in the apprenticeship journeyman mix, which will reduce our labor costs by 10 percent, and a change in hiring home referral rules, which will achieve another 5 percent in productivity gains. This kind of discussion is going on with every trade. The high-rise contractors are negotiating with Locals 14 and 15 of the Operating Engineers. The Operating Engineers don't seem to SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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49 16sddisc Conference have the same sense of urgency, and right now virtually everybody is predicting a strike on Friday by the Operating Engineers. But the painters have agreed to a 20 percent reduction in their wage and benefit rates for all residential work in the boroughs. They have agreed to a freeze for 18 months on wages and fringe benefit contributions. And the Carpenters are involved in these exact same negotiations with primarily Wall and Ceiling. They are hearing from the Carpenters that they have to get their labor rates down, they have to get the cost of fringe benefits down. We cannot afford an $86 package going forward unless we get better productivity and more certainty in the identity of the workforce. So we're confident that if we both work at this, if the contractors will go after that nonunion worker -- they've pledged themselves to do it -- if the unions will recognize that we have to wring out every ounce of fat from the agreements, that the 15 million hours projected by the Carpenters will be 16 million next year and 17, and in three, four years we will be back to 20 million hours. If we're not, we're just in trouble. We're in trouble with pension funds, although that is a much longer term issue, where every fringe benefit fund in New York City is grappling with this issue of 10 percent increases in medical costs, the employers want a SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 16sddisc freeze. Conference Where do you get the money? Do you modify the benefits? Do you redirect money from the Pension and the Annuity into the Welfare Plan? And these are exactly the kinds of issues that the trustees are grappling with. And we're spending hours and hours and hours on this subject. And we know what our fiduciary obligation is. It's to the beneficiaries, the people that are retired. It's to the people that are participating. But, you know, it's also to the generations that have not yet arrived, that we want to keep this wonderful industry alive and viable, and we're struggling to do it and we'll figure out a way. THE COURT: Great. Thank you. So that really exhausts the agenda that I had. Unless anybody else wants to comment? We usually at this point open up the discussion. We have some time left. If people in the audience want to address any of these issues at the podium, they can do that. (Pause) I should say before we do that, I think that the presentations were excellent and at least from my point of view exceedingly helpful. I thank everybody for your participation. Yes, sir. MR. LEBO: Your Honor, my name is Bill Lebo, L-E-B-O, Local 45. I actually prepared a statement, but there were some SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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51 16sddisc Conference things that were brought up today that I -- that kind of threw me for a loop. Mr. Urbank was talking about our funds, and it got to the point when it was going to be a $10 million deficit. You picked that up. THE COURT: I don't think he is making that flat assertion. But he had some numbers that he used, and if you did the math it could be 10 million. But I don't think you could say -MR. LEBO: There or abouts. If everything went as he -- they assumed it was going to, you would end up with approximately a $10 million -THE COURT: You could. MR. LEBO: I was sitting down thinking, all we would have to do, really, is increase a dollar benefit to that fund and you would have $60 million -- you would have a $6 million overdraft. So we are not talking about how the situation -the last time we were here, when I was listening to the tale about the welfare benefits, I thought the thing was about to collapse and that's not -- that just is not the case. There are ways of doing it without hurting. We are talking about decreasing the benefits to pensioners, dental, optical, doing -- you know. To hurt the pensioners is absurd. And this is some of the things that from what I've understood have been talked about. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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52 Conference Now, these are guys with set incomes. They have fixed incomes, and they are drawing a pension. And now they are going to hit them with, well, now you are going to have to pay for your own dental work? One of the reasons we've worked so hard for a living all these years and break our backs and risk our lives every day when we go out to work is because when we retire, we want to be able to retire with our medical benefits intact. We don't expect, you know, decreases in the economy and so forth but they do happen. But then guys like us that are working today for a living would be more than happy to make sure that those pensioners don't lose that. So this should be discussed about these negotiations. We should be looking at cutting the benefits rather than maybe increasing, take -- we have a Fund. We have assessments that were taken out of our paychecks every week that, in my opinion, were done illegally. They were assessed by the past governors of the Council, ESTs, and the delegate body to the point of a 60-cent an hour assessment, where the membership had to have voted on it. And the way I read the law, the membership should have had a vote on their dues and assessments by the ratification of the membership under the LMRDA. It wasn't done that way; so be it. And from what I understand from Mr. Walsh, 50 cents an hour out of that money is going to the organizing department, which now has -SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 16sddisc

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53 Conference THE COURT: Is going to? MR. LEBO: The organizing department, which from what I understand now has a $20 million bank account or a $21 million bank account of monies that they are not using. So there are ways of going around things and maybe taking some of that money back and putting them into that fund to bolster that fund without hurting the membership. That's just one point. THE COURT: All right. We've got other people lined up. MR. LEBO: OK. I'll go through the rest of this quicker, then. On the contract issue, since the UBC is worded well, I ask this Court to extend the -- well, you are going to end up having to extend the contract. I don't think -- I just don't see it happening at the end of, you know, the 30th -- by the 30th. There is a lot of language in the UBC restructuring plan and bylaw draft that violates the LMRDA and the LMRA. I think the U.S. Attorney's Office and the RO should vet this language. There is just clear illegal language in it, and I really think before anything is okayed that should be removed. I had written letters to Mr. Walsh, and I believe -- you know, I hope that comes to pass. On the untimely elections, the problem that may come to pass is that there may be litigations to stop the mergers in SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 16sddisc

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54 16sddisc Conference the locals. This is probably going to happen. It happened back in 1997, '98. I was a litigant in one of the cases. And as a matter of fact, I wrote a letter to this Court, dated February 26, 2011, and I stated that it has been my experience from the last case, in '97 and 198, that the UBC will look to delay these elections as long as they can. I cited a Memorandum and Opinion and Order from Judge Haight in that case, dated February 5, 1999, in which Judge Haight stated: "The UBC makes a perfectly fair point from May until December of 1997. The trustee's efforts at achieving reform through the implementations of the restructuring plan were delayed by the ultimately unsuccessful litigation strategies of union dissidents, including these plaintiffs" -THE COURT: Including? MR. LEBO: "These plaintiffs," myself and -- "but that interim period of time does not suffice to avoid the statutory 18-month presumption of validity, given that the term has now exceeded that statutory period, even discounting the period from May to December." I asked you in that letter to be alert for such delay tactics. And, quite frankly, I see them coming to pass. It is exactly what's going to happen. I believe the UBC has no good intentions for this union, for this Council. I don't trust them. I don't think there is a guy in this room that will stand up here and tell you that they believe that they are SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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55 16sddisc Conference going to do anything for the good of this union. Mr. McCarron has -- they are talking about a loss in market share. When Mr. McCarron took over almost 20 years ago, there was 750,000 members in the UBC. Today there is 350,000. Our market share has been steadily decreasing because his organizing tactics have not worked. He has not done anything constructive in this union that I can tell, and I don't think there is guy here who will tell you that he has. And I just can't see that this guy is out here telling you that, you know, we have to do this and we have to do that with the welfare benefits, and we're going to negotiate the best we can. No, they're not. They're going to give the contractors whatever they want. Mr. McGuire is talking like he's paying us. He's not paying us. We work our butts off for a living. And, quite frankly, I don't trust him. THE COURT: All right. So let's hear the next speaker. If you could state your name for the court reporter MR. FRANCO: Good afternoon, your Honor. My name Dan Franco, F-r-a-n-c-o. Now, I'm not opposed to the December 15th elections, but I do have a problem with the membership being left out of being informed. That is the reason why I started my petition that I delivered to you on June 10th, that I have over 400 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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56 16sddisc Conference signatures, and I have more that I haven't submitted. What I have a problem with is that the membership is often or almost always left out of all actions, and the bigger the action, the more likely that the membership is going to be left out. I would like to have the District Council provide notification to all the members that we have a new set of bylaws, a proposed set of bylaws that is going to be put upon them, because when I was getting signatures for my petition, the majority of those members that signed did not even know that the bylaws and the restructuring, by the time I was getting some of the signatures, they were online. Most members don't go to the District Council website because it is not often updated. It has been updated quite a bit lately, and that's only because of Mr. Walsh. If it wasn't for Mr. Walsh, that website would still be useless. Now, that was really -THE COURT: So you are saying the drafts were and are available on the website? MR. FRANCO: They are available on the website, but the majority of the members do not go to the website. THE COURT: I see. MR. FRANCO: It was nice that we were given -- the people that are looking for it, waiting for it, asking for these documents, the people that are paying attention at this SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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57 16sddisc Conference level -- that we got to know of it and we knew to look to the website. THE COURT: Right. MR. FRANCO: Because we are often conversant with our representatives and with Mr. Walsh, but the majority of members it not even know that it existed. And I find that to be a problem with most information that is provided by the Council, and most information is not provided to the membership, especially documents such as this. That includes the restructuring program. Now, the restructuring program I have a huge problem with, even more so than the bylaws. I find contradictions in this that are very problematic. And the most problematic to me is where it states that there is going to be no change to Local 157. Yes, there is going to be a newly charted Interior Systems Local, which is going to absorb members. Nowhere else does it say that members are going to be transferred out of, except for if you read the paragraphs, it says members will be transferred into the newly charted local. At our last Local meeting, Paul Capurso told us that -THE COURT: You might want to spell that for the court reporter. MR. FRANCO: Capurso? THE COURT: Yes. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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58 Conference MR. FRANCO: C-a-p-u-r-s-o; I hope I've got it right. He told us that the transfer, the 608 members into 157 was temporary. I asked him who told him that. He told us Spencer told him that. So they had to -- the UBC had to have known that they were going to put the Local 608 members somewhere, because they had said early on that it was temporary. So I figured that they already have the Interior Systems Local a pen stroke away from being chartered and they will transfer members into it, yet it doesn't say that any members are going to be transferred out of any locals. So this is part of the doubletalk that the UBC keeps doing over and over and over again. They keep saying they are working for us. They keep saying that they are trying to do the right thing. Just like Bill was saying, the membership has dropped. I think, in the '70s, it was like 750,000, like bill said. I don't know what it was in the '80s. But as it stands today, in 2010, if I remember correctly, it is down to 443,000 members. One of the reasons is that in 1999, the British Columbian Canadian carpenters got so fed up with McCarron's tyrannical control of them where he told them that they weren't allowed to vote on certain things, they eventually disaffiliated. That's going on now in Jersey. He has consolidated SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 16sddisc

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59 16sddisc Conference over 69 -- I think it is 69 local unions in the Northwest and New York State, New Jersey. He has removed hundreds of elected officials, officers, and has replaced them with newly chartered locals with appointed E boards. Everything UBC does they do against the membership. They talk about Phil Newkirk expresses one of the reasons for the restructuring; it is economies of scale. Now, if economies of scale trump our democracy, then we don't need economies of scale; we need our democracy. We want, and need, to elect our representatives to represent us, and not have this economies of scale, or whatever reason that they give, which I think is more doubletalk, put upon us as an excuse to take away our property, our democracy, our local unions that we built, that they are not his, they are ours. He is supposed to represent us, and he doesn't. And I see a long campaign -- even before McCarron got into office as General President, he has had a campaign of removing the rights of members and has transferred their property to him. The UBC Constitution, if you read through it -THE COURT: I don't understand your point. MR. FRANCO: I'm sorry. THE COURT: I don't know what you mean by has transferred their property to him. I don't know what that means. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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60 Conference MR. FRANCO: Our local unions, he has dissolved them, merged them upon his whim. Our property, our Local unions, our buildings, our bank accounts -THE COURT: I see. MR. FRANCO: -- everything, the offices, they are transferred out. Local 608, I asked about what happened to the assets. 608 was dissolved in December. Their assets were removed, and as far as I know -- as far as I have been told, they have been brought to the Council. They have never been returned to the membership. And that would be a pretty easy thing to figure out. Since all six or eight members were transferred into 157, how come the assets weren't transferred? 33 locals -- the 22 in Jersey, the 11 in New York State -- dissolved; where are their assets? The 36 locals in northwest, where are their assets? All taken away. So what the UBC is doing to us I take a great offense to, and that if I'm interrupting an election schedule, I apologize for that, but our democracy trumps any election schedule. If the members are not informed, there is no point in even having an election. If we're going to make the same silly mistakes over and over again by choosing the wrong people to represent us -- and I use that term loosely, "to represent" -that we're going to be in the same problem year after year. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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61 Conference What it comes down to, the best tool to make sure that our property, our assets, our rights are protected is transparency. We must have full disclosure on all matters that are supposed to be disclosed to us so that these problems can't happen again and again. If we shrink our representation down to five in some kind of labor management committee, eventually those people are going to be corrupted, they are going to be controlled. That information has to be disclosed to all members. All information that is ours needs to be disclosed to all of us. THE COURT: I got you. MR. FRANCO: And scanners and cameras and all these other things are not going to help us at the end of the day if we don't have full transparency. I want the members to be notified of all these documents, and be given a chance to read them and comment on them with one another and then be able to present our ideas individually and collectively back to our representatives, to Walsh and to you. Thank you very much. THE COURT: Thanks very much. MR. CLARKE: Good afternoon, your Honor. My name is Gene Clarke. I work 47 years on the tools and five years in the District Council. I worked in the stamp department. Our troubles began and became larger under the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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62 16sddisc Conference trusteeship. That's when we really became mob-controlled. And we are a mob-controlled union. We are not a Mike Forde or a Mickey Annucci, who all got together one day and decided to rob the membership; it is an orchestrated robbery. Also, when the International came in, they started getting rid of good people at the Council. The first guy was Rolando King. Rolando King was the comptroller for the funds. He was asked to leave. If you're going to skim money off funds, you don't need a comptroller to tell them, hey, you can't do that. Do you understand? That's what went on. Also, Pat O'Neill was taken on during the trusteeship. Pat O'Neill was a bright young man that started working with the officers of the International. When he was asked to sign off when the International was leaving, he refused to. He said, I'm not signing that. Because he started looking at what he was signing. Do you understand? That was Pat. Pat left with -- he asked for federal protection when he was leaving the Council that night with his books and stuff. Also, under the trusteeship, you are not allowed to touch money belonging to the members or that Council. Mr. McCarron took six cents an hour from the Labor Management Fund, and he started it that way. I know for a fact, after talking with Fred Devine before he went to prison, that McCarron said, I won't come into New York if you give me six cents. And Freddie said, listen, six cents today and 25 cents SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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63 Conference Stay where you are. Leave me alone. That was the reason why he came into New York. It was all money. Our funds were just ripe for the grab. And that's exactly what went on. For instance, we have a fellow named Richard Dryer that worked down in the school. His job was to get money from Hunter College, federal funding. Hunter College was the people that gave that money. Now, what happened is he gave $10 million to Bob Georgine in Washington, D.C., and Hunter College said you can't do that. He said, Well, that money went to Bob Georgine, Suite 317. I'll never forget it because it was St. Patrick's Day. Now, where that money went, I don't know. I don't think anybody knows. But I do believe somewhere it's not where it should have gone; that's for sure. We have been raped. That's the kind word for what has transpired. We are short all this money, and our funds never, never grew the way they did under Tom -- our last guy, I'm sorry, I've lost the train of thought here. But anyway, he in five years, doubled our money, from 650 million to 1.3 billion. Now, we never seen that kind of return again on our funds. All right? And the International constantly shows their arrogance towards membership elections. In the election of 2008, McCarron got a phone call from -- OK, got it -- Gary Rothman, of Obermeyer & Bernstein. This was over the election SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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64 16sddisc Conference for EST. Gary Rothman took the election committee into a room and got on phone with McCarron and said, Listen, we have a problem here. The problem is they're collecting their pension -- the union king is collecting their pension and the opposition is saying they can't run. McCarron said ignore, ignore the bylaws. They run. So that was just one more fact of how this man slaps this union in the face. He's just a born tiger. That's all. Now, let's get into some other stuff that's gone on with him. THE COURT: Mr. Clarke, you have to wrap up soon. You've got three people behind you. We are running out of time. So you have to wrap up. MR. CLARKE: I have to wrap up? THE COURT: Yes. MR. CLARKE: All right. What I would like to finalize is we had a letter sent to us three years ago, a card. If we signed the card, we would get our vacation check. Our vacation check is used to pay administrative costs -- the interest on it is used to pay administrative costs at the New York City District Council. But what happened is they did -- they had the last two assessments, no one signed the card form. Plus, they elevated the fine, which the constitution and bylaws said you can only fine them 250; they doubled it. Mike Forde and his crew SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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65 16sddisc Conference doubled it. So, therefore, that fine was used against us, and if we did not sign the card, we did not get our checks. I didn't sign the card. There was a demonstration, and a couple of hundred guys showed up and that is what happened. But we have been constantly mis-- by the way, McCarron was notified, hundreds of letters went to him, that you can't raise that fine to 500. He told me -- he just told us, "Take a walk." All right. Thank you. THE COURT: Thank you. MR. NEE: Hi, your Honor. Patrick Nee, N-e-e. I'm the President of Local 157. I supposedly represent 10,400 members, and I don't see how. Because when you are talking about relevant parties, there isn't one local union that's involved in any of these discussions on our bylaws. You have 22,400 members. We've all been through this for 20 years, and have some expertise on the subject, and yet we're not being allowed to comment on the completed bylaws. I mean, we did submit, through our lawyers over here, for the Committee for Democracy, and we submitted through our lawyers all of eleven pages of problems with these bylaws. There is -- I had told myself, why do we need an election that has one person that controls everything? Why do we need an EST? Why can't we divide this up? Why can't I, as SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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66 16sddisc Conference the President of my Local, who represents 10,400 members, why aren't I elected onto the Executive Board? Why don't I automatically go up and represent my members on the Executive Board? OK? So that when I go out to my meetings and I chair the meetings, then my members can ask me what is going on, and I will know. The current system has no involvement of the Local whatsoever. So I honestly don't care when the elections are held; this is not a priority for me. I want us to get this right. And it can't be changed in January. If we have an EST that controls everything, then in January we have an EST that controls everything. The bylaws are the key and the whole -the elections do not matter. What matters is having the proper system in place and that the members agree that this system will work. Because we're paying for this. We foot the bill for all of this. For 20 years we're footing this bill. It's time that we were given a say in this process. And I have a question for Mr. Urbank. I don't think he is here. THE COURT: He is here. MR. NEE: What I would like to know, based on the green zone, I want like to know in the last 10 years, was our pension plan ever not in the green zone? And were the members notified? A simple question. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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THE MR. only been in MR. THE questions. MR. URBANK: That terminology has only started with the Pension Protection Act of 2006. So prior to that there would have been no notification of such. Since that time we probably have been in the green zone, since 2006. THE COURT: OK. Thanks. MR. NEE: What is the lowest our pension plan ever hit in the last 10 years? THE COURT: Mr. Nee, I think we are just going to take some comments, and then we have two more behind you. MR. NEE: OK. And then there is the organization, which also the locals are not involved in. There is one local represented in these entire hearings. Actually, I would like to ask for now for Cary Kane to be considered a relevant party, because they are going to be representing 157. They are going to be representing half the members of this Council. So they are in negotiations because they have worked with us, and what was submitted by them was coming from us. This is what we want. And, I mean, they I think did a tremendous job on it. It is very clear. I want to see what they put into writing, I SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

67 Conference COURT: OK. Do you know the answer, Mr. Urbank? URBANK: The terminology, "the green zone," has effect since the Pension Protection Act of 2006. NEE: Has it ever been endangered? COURT: Wait. He is going to answer the

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68 16sddisc Conference want to see it in the bylaws. No in-person voting for the EST. Why would we want to stop members from meeting the candidates? Why would you get rid of the entire vote system? Members who would like to go down and would like to meet the candidates and who would like to ask the candidates questions, why can't they? I don't understand; why don't we go to direct mail-in ballots? Why can't we have in-person? Why can't we have both? I have no problem with mail-in, but why can't the voters go down and meet their candidates? I mean, that's -- the election I just went to, I stood there from 6 o'clock in the morning until 7 o'clock in the evening shaking hands. People asked me questions. Websites are fine for people who go to websites. Mail-ins are fine for people who like mail-ins. Some people like to vote and ask the person direct questions straight to their face. Why can't they do that? Because if someone has a question -- because, I mean, if you want to bring in a new system, you have to let members get used to it. So if members have a way that they want to judge their candidates on, why are we removing that? Why do we have to get rid of the old completely? I don't see the problem with having in-person voting. This would be just one issue of many that I would like our solicitors to be able to bring to us, and we will tell them if we have problems with this. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

69 16sddisc 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Conference THE COURT: OK. MR. NEE: One more point. THE COURT: All right. MR. NEE: The economies of scale. They are bringing their millwrights upstate, a four-hour drive. They are bringing them to upstate. They are making a new council with them. They are merging them with a different local and a new council. There is no economy of scale there. They are telling us that there is problems with us looking to our members in Long Island and New Jersey because of the distances involved. There is a new council that is going to be a four-hour drive away. We are an hour over the river to New Jersey. So, I mean, their arguments make no sense. I want to see consistent arguments that make sense. They seem to be using different excuses for different things. So, I mean, I want to see everything -- what I saw was a proposed restructuring plan. I want to see what they actually put down. I want real reasons for why this restructuring plan makes work. I want them to give me a reason why 395 works for my members, why I should tell my members go join 395. Because, well, actually, they are not being asked, they are being forced to join 395. Why should they be forced to join a local they don't want to if these locals don't do anything? I am in an unsalaried position and I had to take off work today to come here. So I don't see representation in SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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70 16sddisc Conference these locals, because I most certainly don't think we need any more locals. Whatever they want to achieve, fine, let them go and try to achieve it, but we do not need more uselessness, and that is all another local is. Thank you. THE COURT: Thank you. So we have two more. MR. DOHERTY: Good afternoon, your Honor. I am Bill Doherty. A couple of important points for Mr. McGuire. On the PPA '06 and the Joint Committee on Taxation Amendment to that, you are looking at 1600 pages of legislation. You guys mentioned 2008 and 2009, when you incurred the bulk and the majority of your losses as providing full disclosure to the members. The ERISA statues require that you archive and have available the full report for six years. That's question one. The next -THE COURT: I'm not sure I understand. What was the question? MR. DOHERTY: The whole predicate behind this restoration of democratic rights elimination of fraud and corruption, etc. THE COURT: Sure. MR. DOHERTY: And there had been discussions in this courtroom relative to transparency, etc., and, you know, a new form of democratic engagement. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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71 Conference THE COURT: Right. MR. DOHERTY: And what I'm saying is they are not playing by the rules. THE COURT: I see. MR. DOHERTY: Federal law requires six years. So any member of the District Council should be able to go to the District Council and say go back six years, I want to see the full report from 2005. THE COURT: I see. OK. MR. DOHERTY: The second portion of that is Chapter 829. There is a specific provision that Congress put in there for a direct trustee-to-trustee transfer of the member's annuity fund money to a qualified standard IRA or Roth IRA. And I know many members making those applications for withdrawal of a portion of their annuity accounts to get through these economic times, and UBC is denying those requests, and that's illegal under that Act. And I would like the people to address that. The next issue -THE COURT: Then we have one more after that. MR. DOHERTY: I'll make this real quick. The largest issue by far is the restructuring and the bylaw plan. Mr. Walsh had stated that, roughly, he needs 30 days to finalize that. I just want to ensure that before the contract is inked, that it's going to have an adequate review. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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72 Conference And I want to speak specifically to the mobility. Mobility provisions is operative under NLRA Section 14(b). We have 50 states in this country. 28 of the states are non right-to-work states; the other 22 are right-to-work states. So 14(b) exclusion for the 22 right-to-work states, that falls under state sovereignty; whereas, the 28 union states, that is under the federal preemption. Our biggest argument is leading to the fund losses and a lot of the fraud, in the first instance, is this mobility issue. And the fact of the matter is -- Where did I put this? Anyhow, the defined geographical jurisdiction of the local, the Council, is Manhattan and the five boroughs, and that is a definitive property right. OK? And there is interest under Torbiano, other Supreme Court cases, other appellate cases, you know, with tangible versus intangible rights, and that is one of them under those cases as well as the LMRDA. And there is, you know, a matter in that issue that we want to address to this Court through Mr. Walsh's office, and it is very detailed. You know, anyhow, it is something that we want to present, and I don't know if you want us to do it pro se or if we can just submit it as a letter. THE COURT: If you want something from Mr. Walsh, you can just send it to him. If you want me to see it, you can copy me, or however you want to do it. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 16sddisc

16sddisc 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. DOHERTY: well?

73 Conference So I can forward it to him and cc you as

THE COURT: Sure. If you have got something that you want to bring to his attention, I am sure he will see it. MR. DOHERTY: And there is one more issue, real quickly. THE COURT: You've got one more. OK. Go ahead. MR. DOHERTY: In Pacific Northwest Regional Council Conference, as well as the newly formed NRCC, the UBCJA, the national, included a skills form, and I would like the Court and Mr. Walsh to take a hard look at that language. What it evinces is an individual -- it is an illegal individual contract and an illegal waiver of the member's rights under the NLRA. They have half a dozen major Supreme Court cases that are operative that totally negate it. The J.I. case, for one. And these rulings go back to like 1944. NLRB v. Katz (1962), on unilateral changes, failure to bargain an impasse, and they have improperly withheld that intentionally to defraud this Court, OK, so that you will approve this restructuring plan. That is not right. THE COURT: I get it. All right. Thank you. Next. Last speaker, MR. WELLINGTON: My name is Calyx, C-A-L-Y-X, Wellington, W-e-l-l-i-n-g-t-o-n. I want to make points on two issues, because I do not SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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74 16sddisc Conference want to spend any more time on these. I want to first mention the situation about the bylaws, where the comments were made and drawn and so we get to Mr. Walsh and other members of the District Council, that these comments should be taken very seriously and not be taken lightly, because of the fact that there is a lot of rules and regulations that still give the EST and the trustees full power over the rank and file members. With that said, if the bylaws has been complete or submitted without these comments included, it will be an embarrassment. Secondly, I want to make mention about full mobility. Judge, from my understanding, a document was sent to you by Mr. Kenneth Conboy in regard to a stipulation of full mobility. I am holding this copy, which I printed from online, stating that the companies should get full mobility. And in the pact the company got, based on the Consent Decree, was a 50/50 rule, and they had the opportunity -- the percentage of carpenters selected by contractors shall not exceed 67 percent. Now, if an employer has at least 67 percent of the manpower that they choose and they couldn't get that work done right, the problem is not the rank and file, it is the employer. Now, to give full mobility -- to give these employers 100 percent to select members of their choice and they believe that our out-of-work list is going to do any SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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75 16sddisc Conference better, the out of work list in the District Council has suffered because of the fact that the employers have been manipulating the out-of-work list. They have a company which is 50/50 and they have a request option to call someone from the District Council, who is the very same guys they call them from another job, put their name on the list today, and the next day they call them back to work again at their request. The other workers have been suffering. I have brothers and sisters who are suffering right now, losing their homes, losing their apartments, unable to feed their families, and these are not being taught. So I don't know. I want you to take all these things about the situation, and please think about it and try to help us. Thank you. MR. BILELLO: Your Honor, may I just have a few minutes? Michael Bilello, B-I-L-E-L-O, Local 157. I just want to the express my opposition to the restructuring plan. In particular, they want to give away the jurisdiction of Local 1456 in New Jersey; Long Island, 1536, which is the timbermen, the millwrights, and the floor coverers, 2287. The argument was made before that it is a reduction of hours to the benefit funds, which is only going to hurt us. And the point was made about reciprocal hours coming back to SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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76 16sddisc Conference the benefit funds here, although it is at a reduced rate because of the lower rate so it is a reduction in that respect. But the council that the entire State of New York, with the exception of the city, was merged into with New Jersey, they'll have the right to man those jobs. So in order for the benefits to be reciprocal here, they have to be participants in the fund here. So if they man those jobs with members from the New Jersey Council, we'll see none of those hours here. And what I suspect is that as time goes by, we'll see less and less hours from all of those jobs that we're going to lose. My opinion is the UBC is doing that to circumvent the Consent Decree. Because once that jurisdiction is given away to the New Jersey Council, it is not covered by the Consent Decree anymore. So they are not subject to the manning rules that we have with our hour-worked system. And the members on those jobs performing that work, they don't have the benefits of the Consent Decree, like the rank-and-file vote. And that's what the UBC really wants to get away from is that rank-and-file vote; they hate that. They don't have it in any other place in the country. It is unique here. It was from the Consent Decree. And they don't like our manning provision, either. The 50/50, which is now the 67/33 percent, they don't want that; they want free mobility. So they are giving away that jurisdiction to get out from under the Consent Decree. They SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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77 16sddisc Conference don't want to be told how the jobs should be manned, and they don't want a rank-and-file vote. If you look back to the restructuring in 1998 that was approved by the Court, we had a functioning job referral system then. It was shape calls, where postcards were sent out to a hundred members and they could come down and shape. And the system worked well. The members were happy with it. And we had the 50/50 rule then. And it was only the restructuring from 1998 that took that all away and centralized it at the Council, and a computer just makes all the dispatches now, and it has never worked since that day. It has never worked. Nobody has been happy. The members haven't been happy. The contractors haven't been happy. So every time they restructure here, nobody is happy. It doesn't work for us. It doesn't work for the contractors. And I hope you consider that in your decision. The 50/50, in my opinion, was one of the best anticorruption measures on a job site, because the members had a place they could go back to if they stood up on a job, if they saw something wrong, they could go back to their referral hall and get a job and go somewhere else. With free mobility, they no longer have that option. They either have to stay working for that company or they have to take their chances on hooking up with another company without a referral from the union. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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78 Conference So taking away the 50/50, or the 67/33 now, and giving them free mobility is going to hurt us in terms of anticorruption, and that should be considered very carefully. The whole problem that I've seen is over the years we've tried to change the system here instead of changing the people, and we've just changed the people. We have the Stipulation and Order, and we have had people removed that should have been removed a long time ago. If those people were removed instead of changing the system back in the '90s, we would be in a lot better shape and we probably wouldn't be here today. So it is more about having dedicated people, and I think we are on the road to getting those people there. You know, having this election is important. That's really -- I don't think we should think about not having the election. It is the only way to get the UBC out of here, and everybody is complaining about the UBC and the only way to get them out of here is to have that election and then we can -- as the Review Officer said, we can tweak the bylaws after that. We can see what works, what doesn't work. You know, we have that opportunity then. That's all I have to say. Thank you, your Honor. THE COURT: Thanks very much, Mr. Bilello. OK. I think that's it, unless anybody else has anything else from my perspective. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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79 Conference MR. WALSH: Judge, I just wanted to confirm that the Court did wish to receive an audio recording of the forum. THE COURT: I am happy to take it. MR. WALSH: I will give a copy to the government and to the District Council. THE COURT: We will have it here, and we'll make it Court Exhibit A to this hearing transcript. So does anybody have a thought about another meeting and when that might make sense in terms of the scheme of things -- a date, in other words, or what would be a helpful date? MR. WALSH: Judge, does August 1st, which is a Monday, work? THE COURT: August 8th is better, if that works for you. MR. WALSH: That's fine with us. THE COURT: Do you think you want a date in August? MR. WALSH: Yes. OK. MR. CONBOY: August 8th is fine, Judge. THE COURT: Let me just give you a time. So is it your thought, Mr. Walsh, that that meeting would be as long as this? If that were the case, then August 8th is a little bit of a squeeze. MR. WALSH: I think that it could be shorter than this meeting. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

16sddisc 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE August 8th? along, but I OK? MR. THE

80 Conference COURT: OK. Let's put it down, how about noon on It is a busy day, so we'll try and move things certainly can fit you in at noon. Great. WALSH: Thank you, Judge. COURT: Great to see you all. Thanks very much. -

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