1 1 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 22 23 23 24 25 D7g1disc UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES, Petitioner

, v. DISTRICT COUNCIL, et al., Respondents. ------------------------------x New York, N.Y. July 16, 2013 2:46 p.m. Before: HON. RICHARD M. BERMAN, District Judge APPEARANCES UNITED STATES ATTORNEY'S OFFICE SOUTHERN DISTRICT OF NEW YORK For Petitioner BY: TARA LaMORTE, AUSA MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C. Attorneys for Review Officer BY: BRIDGET M. ROHDE, ESQ. DENNIS M. WALSH, ESQ. Review Officer SPIVAK LIPTON LLP Attorneys for Defendant District Council of Carpenters BY: JAMES M. MURPHY, ESQ. McELROY, DEUTSCH, MULVANEY & CARPENTER LLP Attorneys for Intervenor General Contract Association BY: MARK A. ROSEN, ESQ. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Conference 90-CV-5722 (RMB)

2 D7g1disc 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 (It in open court; case called) THE COURT: So today's hearing, as I've denominated it, results from correspondence that I received from the District Council, including a letter dated June 24, 2013, which enclosed copies of the new collective bargaining agreement between the District Council and the General Contractors Association of New York, and, among other things, the letter says that the agreement provides for the same full mobility and anticorruption compliance provisions as in the collective bargaining agreement between District Council and Wall-Ceiling Association, which I had previously reviewed, and then that was followed by a letter dated June 27 from District Council, which states that at its regularly scheduled meeting held yesterday, which would have been June 26, the District Council's delegate body ratified the collective bargaining agreement, GCA collective bargaining agreement by roll call, a vote of 52 to 7, and requesting that the court issue an order similar to the orders I had issued on May 8, 2013 and also on June 11, 2013. So having received those letters, we scheduled today's hearing, well, to do two things. We asked if anybody had any written comments, and I'm not aware that anybody has written in. I haven't received anything. And we put the matter on for today, which is our practice, to hear if anybody has any comments or objections or anything. So let me hear first from Mr. Murphy, see if I've got SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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3 D7g1disc an accurate recitation of what brings us here today. MR. MURPHY: Thank you, Judge. James M. Murphy, Spivak & Lipton for the New York City District Council of Carpenters. Yes, your Honor, you accurately described that this has the same so-called full mobility provision and the same anticorruption compliance provisions and penalties built into it as the Wall-Ceiling collective bargaining agreement and the BCA, or Building Contractors Association, collective bargaining agreement. If I might, just a couple of points. THE COURT: Absolutely. MR. MURPHY: There is I guess some urgency to this because this contract is used by New York State to set the prevailing wage rate rates for wages and benefits for heavy construction or carpenters work, and we've been informed by the New York State Department of Labor and the comptroller's office that they would like to have some notification by July 18. THE COURT: It's our anticipation that we'll be able to issue an order approving this agreement this afternoon. MR. MURPHY: Okay. Thank you, your Honor. The other thing is that we have really owing to the court the second 30-day report on the reporting and -- of hours and the anticorruption compliance proceedings. I actually have a draft of that report, and we anticipate being able to file SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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4 D7g1disc that with the court by the end of the week. Mr. Walsh will also have his comments on that. One of the problems we have, and the reason we didn't want to file the report and that we have a draft, is that we've had some difficulties with the outside vendor, Standard Data Corporation, in being able, through its software, to recognize jobs that are actually closed, which no one is working, the jobs are finished, and so that when they run their reports, they show compliance on an electronic reporting of only like 30 percent. When we've actually then sampled days and drilled down and laboriously gone through all of the job reports, the actual compliance in the electronic reporting goes up to 90 or over 90 percent on it. So that Standard Data claims -- it's taken over a couple weeks, but they think by the middle of this week, by tomorrow or Thursday, they will have corrected this problem and we'll have accurate figures for the court and then we'll submit the second 30-day report. That will cover both Wall-Ceiling and the Building Contractors Association hours. THE COURT: All right. There also will be a provision in today's order, which I think there was in the last one, that these reports can be consolidated. MR. MURPHY: Yes. The report you will be receiving later this week is both Wall-Ceiling and BCA, and then in the future, we anticipate Wall-Ceiling, BCA, GCA. Sort of an alphabet soup. We have a couple of others that are in the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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5 D7g1disc pipeline waiting that we'll be sending down to you and then bringing before the delegates for CAGNY, Contractors Association for Greater New York, and then the New York Trade Show Industry Association collective bargaining agreement. That's all trade shows except for the Javits Center, which has its own collective bargaining agreement since it's a public benefit corporation. THE COURT: Okay. So I'm going to turn to Mr. Walsh in just one second. I just want to note for the record or ask for the record if anybody else in addition to Mr. Walsh wants to be heard. It does not appear that there's anybody who wishes to be heard. So Mr. Walsh, you're up. MR. WALSH: Thank you, Judge. THE COURT: You bet. MR. WALSH: I was given a report in the form of two printouts of data from the District Council computer, which, given the reports by my deputy chief investigator this morning -- and I would like to hand up these two documents to the court -THE COURT: Okay. MR. WALSH: -- for your inspection, and I have copies for the parties as well. THE COURT: I'll make them -MR. WALSH: And I'll explain what everything means in SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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6 D7g1disc the documents. THE COURT: I'm going to make them Court Exhibit A and B to today's hearing record. MR. WALSH: Beginning with the larger or the longer of the two documents, it's entitled New York District Council of Carpenters Count of Active Jobs. It's dated July 15, 2013. This was printed this morning, but the report was generated yesterday on the 15th by one of the managers at the union who has been in constant contact with my deputy chief, Bill O'Flaherty, who's been riding herd on the District Council's efforts to get the kinks out of this compliance program. THE COURT: Are you referring to the Wall-Ceiling or the BCA? MR. WALSH: I'm referring to the Wall-Ceiling, Judge, the WC, as it's listed. THE COURT: Got it. Okay. MR. WALSH: I'll start with that document and I'll go through the columns. It has Work Date, which is fairly straightforward. It ranges on the first page from June 3rd to July 15th, to the category entitled Job 1M, which means one-man job. There's an active count, which is the total number of one-man jobs captured for this period. There's the reported count, which is the number of jobs where data has actually made its way into the system that was set up by Standard Data for the benefit of the District Council. And SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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7 D7g1disc then there is the unreported count, which shows the total number of jobs which have not been reported out of the total count. The second page continues on with two-man jobs, and as you flip pages, you get into jobs with at least three carpenters or more. THE COURT: Right. MR. WALSH: So we have three pages on this document. When you take any of the categories at random -- and I think it's probably best to go to the three-man plus jobs on the third page. The range again is July 15th back to June 3. You can, in a very straightforward way, see what the ratio is of reported counts to unreported counts, and anyone who looked at this can plainly see that there are issues in the District Council's getting stewards to report their time either by the devices that have been given to them by the District Council or by the telephone message or by logging onto a computer of their choice, and perhaps Mr. Murphy has some more accurate data than what's been provided to me, but there are very few instances that I see where we get anywhere near 90 percent reporting on these key three-man or more jobs. And I view this as a grave problem for the District Council. I view it as a failure of leadership by the District Council in providing written policies and indeed warnings to stewards. This compliance component of all of these contracts is vital to the contract itself, that the linchpin here is the ability of SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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8 D7g1disc members to log on and see the amount of time that has been reported for their jobs. Without that ability, this compliance program falls into the ground, and the District Council has got to get this squared away. I cannot endorse implementation of the GCA agreement without some assurance from the District Council that they are all over this problem, that they have written policies for stewards that informs stewards that there will be consequences, indeed disciplinary consequences, if they don't get their time in and allow the members the ability to log on and check that time for themselves. Mr. Murphy has this data. I think it's very troubling. I think that the senior leadership in the union needs to work with the director of operations and the director of the business center to get these policies in place. They need to call the stewards who have not entered their time, in some cases well past the 48 hours that was contemplated by the collective bargaining agreement itself, and they've got to tell these men and women that they have to get their time in or they will be taken off the jobs as stewards or they will be decertified indeed as stewards representing the District Council. And there is a -THE COURT: As we said at the beginning, one is for Wall-Ceiling and the other is BCA, so this is data for new collective bargaining agreements that have already been signed, sealed, and delivered and approved by the court. So it doesn't SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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9 D7g1disc really speak to this latest agreement because we don't have any data on the latest agreement. MR. WALSH: And I do think that if the District Council takes this as seriously as it needs to that it will not affect the GCA agreement in any way. I do not oppose the GCA agreement in any substantive respect. THE COURT: I see. All right. MR. WALSH: I merely bring to the court's and the parties' attention the urgent problem that there seems to be a lack of focus and a lack of urgency on the part of the senior leadership at the District Council to make sure that the key component, the compliance component, is properly implemented for the GCA agreement and it's fixed as soon as possible on the agreement that the court has already approved and indeed which I have had no problem with. THE COURT: Right. MR. WALSH: But it appeared to me in the first week of implementation of Wall-Ceiling, and the kinks that were revealed could be worked out with diligence. That simply has not occurred, and the District Council has got to up its game and turn close attention to providing lasting solutions to the problems revealed by this data. THE COURT: As you've been talking, I'm thinking we should set, and I will at the conclusion of this hearing today, a date for early September, and you'll all come back and you SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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10 D7g1disc can bring the principals who are involved and we can hear a status report by that time. Hopefully by that time the seriousness of the issue that you raise -- and by the way, just by taking a cursory look at these two columns, that is to say, unreported and reported, it isn't very impressive. So the percentage of unreported in some cases, in many cases, is disproportionately higher than the percentage of reported. And at best, in the three-man job cases, I don't even think you get to 50 percent. Certainly not on average do you even get to 50 percent reported, 50 percent unreported. Does it have to do with the technology? MR. WALSH: Well, I would yield to Mr. Murphy to try to explain to the court and to all of us what the deficiencies could cover here, that it may not be that a steward is shirking his or her responsibilities. There may be technical reasons such as Mr. Murphy mentioned that they don't have an adequate way to identify jobs that have actually closed out so that a computer still registers them as open and it gives the appearance that there's time that should have been entered for those days when in fact it should have been closed. So they need an identifying procedure. But I need to emphasize that the time has come where they've got to solve these problems sooner rather than later, that they've had ample time to focus on this, and I think they need to sharpen their focus in the very near term. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

11 D7g1disc 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: Mr. Murphy? MR. MURPHY: I'm not disagreeing with the review officer on his view as far as the education and following up with the shop stewards. I note initially just anecdotally that certain shop stewards that publicly stated that they would not use the electronic reporting were then talked to and told that if you don't stop your resistance, you will be removed as a shop steward, so they started to do the electronic reporting. But just -THE COURT: And why wouldn't they? MR. MURPHY: Oh, because they didn't feel comfortable with it, because they liked doing the paper reports that were done weekly and then you'd come to the union and hand them in during the work time, and so part of this whole process is that is going to go away. There won't be paper steward reports, there won't be the lost time of people leaving jobs and coming to the District Council's offices or regional offices to drop off the weekly paper shop steward reports. But for instance, some of the research that the director of operations office, the out of work list it found on Wall-Ceiling jobs -- for example, on July 7th, 86 jobs were identified as actually closed and therefore the number was reduced from -- reduced to 261 from an initial daily total of 347. Of the 261 active jobs, 245 were identified as hours having been reported electronically, and those without SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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12 D7g1disc reporting hours declined from 102 to 16. So part of that -and as I said, they were supposed to get the up-to-the-minute, accurate reporting from Standard Data on that and that -- all of that will be detailed in the report that we plan to submit to the court later this week. But looking at these figures, they're not -- they are remarkable in the sense that it looks like what's supposed to be going on is not going on, and I think that in certain respects they're misleading because it rolls in jobs that nobody's performing because they're completely closed, the construction is finished. THE COURT: Okay. But still, the data is the data. MR. MURPHY: Exactly. THE COURT: So on its face it's problematic. Okay. Anybody else want to comment? Government? MS. LaMORTE: Tara LaMorte for the government. Your Honor, just to note that the compliance procedures from the government's perspective are extraordinarily important and one of the cornerstones for agreement to modify Judge Haight's 2009 order. So just to put that on the record and to note that holding a status conference with principals in early September of 2009 seems to be -- 2013 -- thank you -- seems to be the right approach going forward. The problems should be ironed out by then. THE COURT: And what about the collective bargaining agreement that brings us here today? Do you have any reason to SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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13 D7g1disc oppose that agreement? MS. LaMORTE: No, your Honor, we don't. THE COURT: Okay. All right. Anybody else? Did you want to be heard? MR. ROSEN: No, your Honor. THE COURT: All right. So let's say Tuesday, September 3rd. Unless people are away. That's the day after Labor Day, first day back. At 9 a.m. And who would be best in attendance, Mr. Murphy? I want the most responsible party or parties and also the technology people who know about implementing. MR. MURPHY: If I may, for a second? THE COURT: Yes. (Counsel conferring) MR. MURPHY: Your Honor, consulting with the review officer, we believe that probably the best people to attend would be the executive secretary/treasurer and president Steve McInnis, M-C-I-N-N-I-S; the senior business manager Paul Capurso; the direct of operations Matthew Walker; the inspector -- inspector general Scott Danielson; and the head of the out of work list, who compiles a lot of these statistics, Aaron Golshen. THE COURT: Anybody else? MR. WALSH: Judge, I'd also request that a representative of Standard Data be available for inquiry. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

14 D7g1disc 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: Yes. Okay. That sounds quite appropriate. But let's say also that perhaps say a week before September 3, if you could send me a brief letter and indicate whether there's any improvement in the data so I know -- how often is this data compiled? MR. WALSH: Judge, this data can be compiled at will. THE COURT: At any time? MR. WALSH: Yes. THE COURT: So maybe if you send me the latest reports and indicate if there's any trend, you know, toward improvement as compared, for example, to Court Exhibits A and B, which are the two that were handed up today. But I still want to go forward with the hearing on that date. MR. WALSH: Oh, yes, and I'd be happy to send the court, for instance, every two weeks an update in letter form. THE COURT: That's fine. Okay. And so I'll probably make some note in the order. I am going to approve the contract today, but I'll probably include a note in there raising this concern about the compliance, technological changes. Okay? Great. Nice to see you all. ALL COUNSEL: Thank you. o0o SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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