You are on page 1of 103

Case 14-3506, Document 35, 11/26/2014, 1380999, Page1 of 103

UNITED STATES COURT OF APPEALS FOR THE SECOND CfRCUIT


Thurgood Marshall U.S. Counhouse 40 Foley Square, New Yor ~ NY ]0007 Telephone: 212-857-8500
MonON lNFORMATJDN STA"rEMENT

[)ocket Numberil1 j: _1:...4'---3


':.:5-:0:::6"-__________~

______--.Ju.;;,Q!"""o"nl!I""
"'-'''''"o''"'-'.!!J'"<JIL

_ _ _ _ _ __

United Stales
V
~p:.:e:.:.n:.:d::.:i n-"g2.c..:
re~vi
c:.e
::.w
~",
o r.Jp,-,e",n-"d=,-,
i n "-,
g o"u:.:.r:.:a",p"p,,e:.:a:.:.1_ __ 0 i sin cl Counci I of New York City
M otiDn for:

The stay of the entry of a consent decree

,...,

Sct rorth below precise. complete stalcmenl of ~Iie r sough t;

To enjoin the parties from entering into a

"n("":
,

U>

oc ~

oC
-t '
:;;C ::..
c:: -1 "

Stipulation which is in excess of the

=' 0:'/

authority held by the parties and 10 enjoin

rn'"T'l. C

;z:lY'::

c>

..:
N

'"

-0

:so

,. -..

N-o -

the entry of a stipulation which would bar us

-00

<TO'"

from running for elected office in our

U>

union.
MovlNRARn Patrick Nee/Levy Messennetti

"'IOVlNG ATIORNEY:

OPPOSONG PARTY,

United States

[ZI'Defrndaot

UPlain!iff
O AppellantIPcrihOll(Y

AppeJIedR.espolldent

_P_r-'_s-'---_---;=::-:-=:::::-_c:;-~-c
o _e
OPPOS ING A]TORNEY: Benjamin Torrance
(nlll\'\e of aTto roey, with firm. add ress, phone numbe r and e-mail ]

86 Chambers SI. New York, NY 10007

see attached
---------------------------benjamin.torrance@usdoj .gov
---------------------------- 1(212) 637-2703
Coon.J.dg"'Ag,oc,."",,"'" from,

90 civ. 5722, Southern District Court, Judge Berman

Please dJeek approprilltr bor es:


Has

mo~ nOl i ~opposing

counsel

FOR EME RGENCY MOTIONS, MOTIONS FOR ST AYS AND


(TeqU1~d

by Local Rule 27.1):

LtJ Vesl..JNo(explain):_ _ _ _ _ _ _ _ _ __
_--,::---,-~---:-----------

Opposin~.~~msers

position 00 motion:

INJUNCTIONS PENDING APPEAL:


Has rt:ques t for n;:llefbee1l made below?
Has thi s rcl iefbeen previoll sly sought in lhls Court?

[7] y" O No

D Yc~ [Z] No

Requested return date and e.>: planati o n ofemergency: _ __ _ _ __

The Stipulation entered by the District

U Unop~ Gpposed 0.>00'[ Know

[)oes opposing counsel inll:lld to iilc a response:

Court allows for an action to be taken within 8

O y" QloiIPoo" ""ow

days, but as we have learned can take over


two and a half years to correct in the courts
Is oral ara,wm:nl on molion requC:Slcd?

[Z]yes

Has a rgumenf dal60f llppeaJ been set?

Ye~

No (reques ts for o rnl argume nt wi U not necessarily be granted)

DNa

If yes,eDler dat e: _ _ __ _ _ _ _ __ __ _ _ _ _ __ .

SefVlCe by: D

Fonn T-1080 (rev. 12-13)

CMlECf

Ocher [Attach proo fof scrvice]

Case 14-3506, Document 35, 11/26/2014, 1380999, Page2 of 103

Patrick Nee
6818 52"d Drive
Maspeth, New York, 11378.
Telephone (718) 593 6414
Email patjnee@yahoo.com

Levy Messinetti
250 Pacific Avenue
Lawrence, New York, 11559.
Telephone (516) 808 2928
Email piedpiper608@yahoo.com

Case 14-3506, Document 35, 11/26/2014, 1380999, Page3 of 103

,,

14-3506

United States Court of Appeals

For The Second Circuit

UNITED STATES OF AMERlCA,

Plaintiff, Appellees.

v.

PA TRlCK NEE AND LEVY MESSINETTI

Defendants, Appellants.

(caption continued on inside cover)

On Appeal From The United States District Court

For The Southern District Of New York

Memorandum in Support of an Injunction or

Stay Pending Appeal or Review

Patrick Nee
6818 52 0d Drive
Maspeth, New York, 11378.
Telephone (718) 5936414
Email patjnee@yahoo.com

Levy Messinetti
250 Pacific Avenue
Lawrence, New York, 11559.
Telephone (516) 808 2928
Email piedpiper608@yahoo.com

Case 14-3506, Document 35, 11/26/2014, 1380999, Page4 of 103

Statement of the Case


On June 26,2012 the Review Officer acting under authority purportedly
contained in a stipulation entered into in June 2010 (Appendix. 5) between the New
York District Council of Carpenters and the Government, removed us from our elected
positions at Local Union 157, which is a separate legal entity from the District
Council. In July 2012 we appealed this action to the District Court. On October 23,
2012 the Di strict Court upheld the Review Officers removal of us from our elected
positions at the Local Union. (Appendix. 11) On November 20, 2012, we appealed this
Decision to the Court of Appeals. (Appendix. 12)
On July 23, 2014 the Court of Appeals vacated the District Courts Decision and
found that on reviewing the 20 I0 Stipulation and Order de novo, "that its language is
capable of multiple interpretations and therefore ambiguous, and disagreed "wi th the
District Court's conclusion that the 2010 Stipulation "unquestionably" affords the RO
the power to veto the tenure of elected local union officials ." The Court of Appeals
found that as there were,
"dueling plausible interpretatioo.s of and attendant ambiguity in tbe
language of the Stipulation, extrinsic evidence may be considered '10
ascertain the parties' intent, including the circumstances surrounding the
fonnation of the decree." (internal quotation marks omitted). Such
evidence may assist the court in defining the RO's authority under
Paragraph 5(b) and in detennining whether there are differences between
udisciplioary
actions"
and
the
actions
taken
against
Appeliants."(Appendix. 17)
The District Court on remand issued an Opinion and Order on September 10,
2014, which never reached this issue, bolding that "[tlhe July 23,20 12 and July 24,
2012 applications of Mssrs. Nee and Messinen; to vacate the RO's June 26, 2012
- 1

Case 14-3506, Document 35, 11/26/2014, 1380999, Page5 of 103

Notice of Veto no longer present a "case or controversy," and that our case was moot
as we "lack[ed] a legally cognizable interest in the out come." (Appendix. 32)

Proposed Stipulation in May 2014


In May 20 14 while our case was still in the Court of Appeals, the Government
and the District Council submitted a new proposed stipulation (Appendix. 15) for
consideration by tbe District Court. Under ~ 5.j .iv.(4) of that stipulation:
"Any candidate seeking to run for a position as an officer of the District
Council during the Independent Monitor's tenure must first be approved
by the Independent Monitor, who will determine whether in light of the
terms and objectives of the Consent Decree the candidate is qualified to
run for office and represent the union membership. Any such decision by
the Independent Monitor will be fInal and non-reviewable. Without
otherwise limiting the Independent Monitor's discretion under this
paragraph 5.j, no candidate may be approved to run if the Independent
Monitor determines any of the following:
(4)
The member'S service as an officer of the District Council, or in any
other elected position of the District Councilor a constituent local union,
was previously vetoed by the Review Officer under the authority of the
June 2010 Stipulation and Order for a violation of the 1994 Consent
Decree or the June 20 I 0 Stipulation and Order.
We objected to the entry of this stipulation on the grounds that our appeal
conferred jurisdiction on the Court of Appeals over those aspects of the case
involved in the appeal and dives ted the District Court ofjurisdiction to alter the
Court's October 23, 2012 Decision and Order to now extend to a bar from
running for elected office. (Appendix. 16)

-2

Case 14-3506, Document 35, 11/26/2014, 1380999, Page6 of 103

September 30, Conference

On September 30, in a conference regarding the implementation of tbis proposed


stipulation, (Appendix. 35) Judge Bennan made the following statement,
"I was thinking personally, for me, a metric is it is really the mechanism
of how matters come to me, but the vetoes are a metric in a way. They
tell me, its a snapshot. It is not, by any measure, a picture of what the
whole union is abDul, what it is doing; but it is at least some snapshot of
some form of discipline. The process itself has been working, as far as I
am concerned, the veto process." (Sept. 30, Hr. Tr. 11, 17-22)(emphasis
added)
Which is contrary to the position which the Court had taken on November 20,
2012 where the Court beld,
"The Court is fully aware of the gravity of the RO's actions in these
matters. At the same time, the Court notes that the RO did not exercise
his authority under Paragraph 5(a) of the Stipulation and Order to bring a
di sciplinary charge against the appellants. (See Hr'g Tr. , dated Oct. 18,
2012, at 38:1-3 (MR. WALSH: "Thi s is not a disciplinary charge
brought against any of these men. Their union membership rights are not
in any way affected.").)" United States v. Dis!. Council ofNew York City,
90 crv. 5722 RMB, 2012 WL 5236577 atN5 (S.D.N.V. Oct. 23, 2012)

Stipulation Proposed On November 14


On November 14, the parties submitted a second Proposed Stipulation which the
parties described as "substantially the same as the previously submitted Stipulation and
Order of May 27,2014, with tbe exception ofparagrapb 5.b.iii, relating to the
Independent Monitor's review and oversight authority, and paragraph 5.j.iv, relating to
the approval of candidates for District Council Office, in light of guidance from Your
Honor."

"The parties have also agreed to remove the four subparagraphs that were added
to paragraph 5.j.iv in the May 27, 2014 proposed Stipulation and Order. Upon
-3

Case 14-3506, Document 35, 11/26/2014, 1380999, Page7 of 103

reflection and discussion between the parties, we agree with Your Honor that the
inclusion of these subparagraphs that laid out when an individual could not run for
office was unnecessary. Thus, the newly proposed Stipulation and Order excises these
provisions from paragraph 5.j .iv." (see All. A, Pg. 3)
On November 17 we objected to the entry of the second proposed stipulation on
the grounds that we could not be both barred from running for elected office and not
had any judicial relief available to us in our appeal on September 10 and that the relief
sought in the November proposed stipulation was in excess of the authority held by the
DisITict Council under the unions constitution . (see All. B)
On November 18, the District Court implemented the Stipulation, and on
November 21 entered the following on the docket in 90 civ 5722,
Based upon the record herein, including without limitation, the hearings
held on September 30, 2014 and November 18, 2014, and the objections
to the proposed Stipulation and Order Regarding Appointment of an
Independent Monitor and to the flnal version of the Stipulation and Order
submitted by Mssrs. Patrick Nee and Levy Messineni on May 27 , 2014
and on November 17,2014, respectively, the Court, on November 18,
2014 , approved the Stipulation and Order Regarding Appointment of an
independent Monitor between the above-captioned parties. (see All. C)

Summary of Argument
We are objecting to the Monitor having the authority to ' approve ' candidates
before they are pemined to run for elected office because this authority bars us from
running for elected office witbout ever having been afforded the required process and
alters the theory upon which the case was originalJy decided, (a decision which we are
currently appealing). Before one can stop any union member from running for elected
office in tbeir union, otber than for nonpayment of dues, that member has to have been
-4

Case 14-3506, Document 35, 11/26/2014, 1380999, Page8 of 103

provided with a fair hearing and the opportunity to defend themselves. Tbe very
minimum that can be afforded to any member is the process contained in their unions
cOllstitution .

We were never afforded that process or anything close. The Review Officer and
the Government have even relied on the theory that the action wbich was taken against
us was permissible because it would not impact on our right to run for elected office.
Yet under the Stipulation entered by the Court on November 19, we are barred from
running for elected office in our union.
We are also objecting to tbe Monitor being granted the authority to summarily
remove elected officials from the Local Un.ions affiliated with the District Council.
The District Council does not have the authority to agree to this relief. The authority
held by tbe District Council over the locals is that which is contained in the unions
constitution, and the autbority to summarily remove the locals elected officials is not
contained in the unions constitution. The local s are not a party to the stipulation, and
the District Council has no autbority to bargain away the rights of the locals in a
stipulation which is between the District Council and the Government.

Argument
The basis for the contention the Review Officer held the authority to remove
elected officials without being required to follow any particular procedures under the
authority granted to him in the 20 I 0 Stipulation and Order was based on the premise
that his actions could not be considered as disciplinary actions, "the matter before this
Court does not involve a disc iplinary proceeding under ~ 5.f of the Stipulation and
Order but rather tbe exercise orthe RO's Review and Oversight Authority under
-5

Case 14-3506, Document 35, 11/26/2014, 1380999, Page9 of 103

paragraph 5.b., ..... there are no procedures required or mandated for the RO's exercise
of his Review and Oversight Authority. This allows for the streamlined removal of
individuals who in the RO's judgment violate certain laws, fiduciary duties Or are

inconsistent with the Stipulation and Order's objectives such as eradicating corruption."
(An. 0, p 14, see also An. E, pg. II , same)
A position that the Review Officer made plain in his Declarations entered on
October 14,2010 and October 27, 2010,
"Paragraph S.b is not a disciplinary provision. The petitioner has not been
disciplined nor subjected to disciplinary proceedings by tbe veto of the
RO. The disciplinary authority of the RO is separately stated in Paragraph
5.f, which forms no part of and is not rel evant to the present proceeding."
(An. F, pg. 7, see also An. G, pg. 5, same)
The District Court's December 2 t, 20 I 0 Decision noted this position,
"Walsh contends, as noted, that his actions did not involve disciplinary
proceedings under 'I 5.f of the RO Order, see, e. g. , United States v. Int"
Bhd. of Teamsters, 247 F.3d 370, 386 (2d Cir.2001) ("Carey &
Hamilton"), but rather the exercise of R & 0 Authority under ~ 5.b.
Moreover, the District Council contends that " [paragraph) 5.f applies to
intra-union cbarges, members bringing charges against other members and,
in some instances, [the RO) wishes to bring disciplinary charges in terms
of your membership rights, expulsion, suspension from membership or
fines. The procedures that were promulgated between the [D)istrict
[C)ounci l and the [RO) under 5.fwould apply in those situations" but not
to the present Cases. (Hr'g Tr. at 16: 16-24.)" United States v. D is!. Council
ofNew York City, 90 CIY. 5722 RMB, 2010 WL 5297747 at N7 (S.D.N.Y.
Dec. 21, 2010)
A position the Court reiterated in United States v. Dist. Council of New York
City, 90 CIV. 5722 RMB, 2012 WL 5236577 at N5 (S.D.N .Y. Oct. 23, 2012)

"The Coun is full y aware of the gravity of the RO 's actions in these
matters. At the same time, the Court notes that the RO did not exercise
- 6

Case 14-3506, Document 35, 11/26/2014, 1380999, Page10 of 103

his authority under Paragraph 5(a) of the Stipulation and Order to bring a
disciplinary charge against the appellants. (See Hr'g Tr., dated OCL 18,
2012, at 38:1-3 (MR. WALSH: "This is not a disciplinary charge
brought against any of these men. Their union membership rights are not
in any way affected.").)"
The Government ecboed this position in their September 30, 2013, brief in the
Court of Appeals,
"Moreover, the Review Officer's action was not a disciplinary matter.

("the [Review Officer] did not exercise his authority ... to bring a
disciplinary charge against [Nee and Messinettil"). Although Nee 's and
Messinetti 's tenures as officers were ended by the Review Officer's
veto, they lost no union rights going forward, including the right to run
for election again. Cf Carey & Hamilton, 247 F.3d at 374-78 (referring
to "disciplinary sanctions" consisting of pennanent bar ofunj on officers
from membership Or holding office)." (12-4883, Doc. # 40, pg. 33, N9)
Vet on September 30, 20 14, during a conference regarding the entry of a new
stipulation between the Government and the Council Judge Bennan made the
following statement :
"I was thinking personally, for me, a metric is it is really the mechanism
of how matters come to me, but the vetoes are a metric in a way. They
tell me, its a snapshot. It is not, by any measure, a picture of what the
whole union is about, what it is doing; but it is at least some snapshot of
some fo rm ofdiscipline. The process itself has been working, as rar as I
am concerned, the veto process. (Sept. 30, Hr. Tr. 35, pg.ll , 17-23)
(emphasis added)
It has been acknowledged that the Review Officer's disciplinary authority was
contained in solely in ~ 5.f. and that the Review Officer held no authority to take any
disciplinary action under ~ 5.b.. Vet the same District Court which upheld the Review
Officers actions, now believes that they were in fact disciplinary. Which brings the matter
full circle to the quest ion presented by the Court of Appeals Mandate, "whether there are
-7

Case 14-3506, Document 35, 11/26/2014, 1380999, Page11 of 103

differences between "disciplinary actions" and the actions taken against Appellants?" and
the answer to that question is that there aren't any differences.
Which means that the real question becomes '"why was the District Court upholding
actions taken by a court appointed officer, if the Court believed that those actions were in
fact contrary to the 201 0 Stipulation?

How caD the Review Officers actions, which even the Review Officer and the
Govenunent acknowledged, could not impact on a members right to run for elected office,
suddenly get converted into a bar from running for elected office?
"There is one other concern that I have, which 1 don't understand. 11 is,
again, in the category of, if it ain't broke, don't fIX it. So now you -- as
nobody knows better than you -- you have the authority to not qualify
someone who is running for office. Right? They have to go to you. You
screen them and you determine. And there's broad authority and broad
language that gives you the ability, non-reviewable duty to do that. In the
proposal, there's a lis/ ofthree or four things now thai are I guess sort of
au/omalie. I don't understand, honestly, why we need those things,
either, added." (Sept. 30, Hr. Tr. 27, 10-19) (emphasis added)

In response to the above observation from Judge Berman, the Government and the
District Council submitted another stipulation on November 14, in which,
"The parties have also agreed to remove tbe four subparagraphs that were
added to paragraph Sj.iv in tbe May 27, 2014 proposed Stipulation and
Order. Upon reflection and discussion between tbe parties, we agree with
Your Honor that the inclusion of these subparagrapbs tbat laid out when an
individual could not run for office was unnecessary. Thus, the newly
proposed Stipulation and Order excises tbese provisions from paragraph
S.j.iv."

Which simply means the stipulation contains no construction to show that we are
barred from running for elected office, even though this is the case. That the District
Court believed that it was appropriate that there not be any language in the Stipulation
-8

Case 14-3506, Document 35, 11/26/2014, 1380999, Page12 of 103

to show this is not surprising to us, as it has become apparent that the District Court
has never felt restricted to acting within the four corners of the Stipulation, and
interprets the Stipulation to reflect whatever the Court believes the Stipulation should
say, as opposed to what was actually agreed to by the parties or indeed what the parties
even had the authority to agree to, and so any language could in fact be considered

superfluous.

The District Councils Authority Under The Unions Constitution


The District Council does not have the authority to grant the proposed monitor the
authority to summarily remove elected officers of the Local Unions who are a separate
legal entity and are not a party to this matter.
Officers of constituent locals are elected to their office and their terms and powers
are set forth in the United Brotherhood of Carpenters Constitution, (Appendix. 24) and
as such they are neither employees nor officers of the District Council. The District
Council has no authority to effect the tenure of the officers of the local unions
affiliated with the District Council.
"A union constitution is a contract between labor organizations. As such,
in an action brought under 29 U.S.C. 185, it may be enforced like any
other contract." Local Unions 20 v. Carpenters, Joiners ofAmerica, 223
F. Supp. 2d 491,498 (SONY 2002). (citation omitted).

Neither Local 157 nor any oftbe other locals affiliated with the District Council
are a party to this matter.
"[I]t is a principle of general application in Anglo-American
jurisprudence that one is not bound by a judgment in personam in a
litigation in which he is not designated as a party or to which he has not
been made a party by service of process. This rule is part of our "deep
rooted historic tradition that everyone should have his own day in court.

-9

Case 14-3506, Document 35, 11/26/2014, 1380999, Page13 of 103

A judgment or decree among parties to a lawsull resolves issues as


among them, but it does not conclude the rigbts of strangers to those
proceedings." Marlin v. Wilks, 490 U.S. 755, 761-2, (1989)(intemal
citations omitted)

The Council's only authority in regards to the removal of a local union ' s officer is
the power to conduct trials of members within its jurisdiction subject to Sections 51
and 52 of the Constitution, and does not extend so far as to allow the Council to create
a tribunal which does not meet these strictures,
"A District Councilor Regional Council shall bave the power to conduct
trials of members or Local Unions within its jurisdiction who have been

charged with violating the Constitution and Laws, violating the District
Councilor Regional Council Bylaws andlor Trade Rules or violating the
Trade Rules of a Local Union when such violation occurs within the
District Council's or Regional Council's jurisdiction, and impose such
penalties as they may deem the case requires, subject to Sections 51 and
52 and the right of appeal under Section 53. (Constitution, 11 26F)
The USC Constitution does not allow for the summary removal of officers and
describes only one method to effect the removal of an officer whereby "[alny officer
may be removed after due trial upon charges preferred in conformity with Sections 51
and 52 of the Constitution and Laws." ('132) The USC Constitution further provides
that " [tlhe regular terms of elected officers shall be three years in Local Unions ..... or
until their successors are elected, qualified and instaUed,"(1131 C).1) 51 li sts the various
charges which may be brought against a member and 1)52 describes the process which
any officer can expect before they can be lawfully removed from office prior to the
conclusion of their three year term . That officer is entitled to a fair and impartial
hearing, with a jury of their peers; to be present at all times when evidence is being
received ; to have the accuser's case presented first; to confront and cross-examine

- 10

Case 14-3506, Document 35, 11/26/2014, 1380999, Page14 of 103

witnesses and recall witnesses; to call witnesses of their own; and to make a closing
statement.
We are also mindful of the fact that we are not lawyers, and that the courts have
recogni zed that pro se submissions are to be

'~o

be liberally construed," and "however

inartfully pleaded, must be held to less stringent standards than fonnal pleadings
drafted by lawyers" Erickson v. Pardus, 551 U.S. 89,93-94,127 S.Ct. 2197, 167
L.Ed.2d 1081 (2007) (per curiam) (Ciling Estelle v. Gamble, 429 U.S. 97, 106,97 S.C!.
285, 50 L.Ed.2d 251 (1976)), and appreciate the extra effort which migbt be required
of the Court in dealing with pro se submissions.

Conclusion
The District Council holds no authority to submit the elected officials of the locals
to sU!lunary removal and the District Court could not go back in time and cause us to
now be barred from office when the opposite theory was relied upon in the District
Court.
We are asking the Court to enjoin the parties from entering into any agreement
which unlawfully attempts to bar us from running for elected office, and to enjoin the
parties from attempting to grant the Monitor the authority to summarily remove the
elected officials of the locals, where neither party has the authority to agree to such
relief.

/1- <'6-/
Patrick Nee

Date

Date

- II

Case 14-3506, Document 35, 11/26/2014, 1380999, Page15 of 103

"

.
-

Att. A

Case 14-3506, Document 35, 11/26/2014, 1380999, Page16 of 103

Case 1:90-cv-OS722-RMB-RLE Document 1588 Filed 11114114 Page 1 of 3


1185 AVEtIJE OFTKEAMlRICAS llSTA..OOII

ZUCKERMAN SPAEDER

UP

HfWVORtt tN Ul036-26Ol
212..7()4.9600 212.1()4.42S6 tu _.lIIdIemaIl.a.Jl

-.

............ JOIES

(2121 881<W31
bIon~.oom

November 14, 2014

VIA HANI) DELIVERY AND ECF


Hon . Richard M. Berman
United States District Court for the Southern District of New York
Daniel Patrick Moynihan United StaleS Courthouse
500 Pearl St reet
New York, NY 10007

Re:

United StOles v. District Council, No. 90-cv-5722

Dea r Judge Berman:


The District Council, the Benefit Funds, and the government write to submit this second
proposed Stipulation and Order, which was approved by the Delegate Body of the District
Council on October 8, 2014, and signed by the parties on November 14,2014. This Stipulati on
and O rder is substantially the same as the previous ly subm ia.ed Stipulation and Order of May 27 ,
2014 , with the exception of par<te,arnph 5.b.iii, relating to the Independent Monitor's review and
oversight authority, and paragraph 5.j.iv, relati,ng to the approva l of candidates for Di strict
Council Office, in light of guidance from Your Honor. The dates in the Stipulation have also
been updat.ed to reneet those set al the court conference of September 30, 2014, and In your
order of October I, 20 14 .
Following the September JO conference and in response 10 Your Honor's concems with the two
aforementioned provisions, the Disrrict Council met with the government [0 discuss alternati ve
mechanisms that might be acceptable to the Court . We take this opportunity to describe Ihese
changes and the parties' reasoning in support of the new proposal s.
Under the newly proposed paragraph S.h.iii. if the Independent Monitor (" 1M") makes the
determination that an action of the District Councilor of a member of the Council constitutes or
furthers an act of racketeering, furthers association with any barred person, violates any law or
coun order in this case, is contrary to any fiduciary responsibility under 29 USc. 50 I or
ERJSA, or is inconsistent with the objectives of the Stipulation and Order and Consent Decree,
the 1M will give the District Council and, if applicable , the person to be removed from office or
e mployment notice and an opportunity to be heard . If the Co uncilor the individual does not
reply to the 1M, does not agree with the 1M's proposed course of action, or the 1M is not
persuaded by the proffered reply, the 1M will present his evidence and recommendati on for
action to the Districl Council's Executive Comminee,

H'WVORK

r......

BAIll.....

Case 14-3506, Document 35, 11/26/2014, 1380999, Page17 of 103

Case 1:90-cv-05722-RM8-RLE Document 1588 Filed 11114/14 Page 2 of 3

ZUCKERMAN SPAEDER

UP

Han. Richard M. Berman


November }4, 20 14

Page 2
The Executive Committee will then make the final decision whether there is substa nli al evidence
to support the conclusion of the 1M and whether the action should or should nOl be taken or th e
person should or shou ld not be removed from office or employment or face other action.
Following this decision, the aggrieved party, wh ether it is the 1M, the Counci l or the individual
facing removal, may then pet ition Your Honor for review of the Executive Committee"s
decision. In conducting this review, the position of (he fM will be given the same level of
deference afforded to final agency action under the Administrative Procedures Act.

The parties believe that this review structure addresses bolh the co ncern s of the Co Uri and of Ihe
parties. Instead of placing the decision regard in g the act ion to be taken in the Co urt , as the May
proposed Stipulation and Order did, the new ly proposed paragraph S.b.iii rums thi s decision
making inward to the Union, addressing Your Honor's concem that thi s is th e direction thaI
should be followed to enhance union se lf-governance. The new mechani sm continues to all ow
for appeals to Your Honor, as did the June 2010 Stipulation and Order, but places the inili al
decision-making in the hands of the Co uncil. This is an i.mportant step as it places the onion
leadership in the position 10 make potentially unpopul ar decisions necessary for the good of the
Union and consistent with the objectives of the Conse nt Decree and Stipul at ion and Order.
Moreover, this decision and review protocol reflects the government 's and Review Officer's
stated recognition of the impressive progress recently made by the District Co uncil.
Effective, self-governance by the Coun cil is the goal of all of the parties in this case. To achieve
this goal, the District Council needs to be able to demonstrate to the Court and to the government
that it can effectively monitor itself through its own instirutions and poli cies, and make its own
lawful decisions.
As noted above, the current proposal will allow the District Counci l to make dec isions in the firsl
instance but will also provide a critical backstop of review from Your Honor. We recognize thai
the provision is a way station between having a Review Offi cer with the power of the velD and a
place without any government supervision. This midd le ground is the space that the District
Council now occupies, and we sub mit thai the powers granted to the [M shou ld reflect this
reality. And lhi s stopover is a wonhwhile one. It is signi ficant that th e District Counci l itself
will be called upon 10 make the decision about the implementation of the posi ti on of the 1M .
This will be an important learning experience for the Execut ive Co mmittee. allowing the uni on
to truly exercise the self-governance that is a criti cal goal of the National Labor Relations ACI ,
see 29 U.S.C. 151. At the same time,the continui ng ability for an aggrieved pa rty to petition
the Coun for review recognizes that the Counci l is still on the path of recovery from the
influences of corruption and racketeering addressed by the Consent Decree and earlier
Stipulations and Orders. Further, how well the Execut ive Commi nee compons itself in th is less
supervised decision-making ro le wi ll serve as a clear metric of the ex tent to which the Co uncil
has internalized the goal s of the Consent Decree and Stipul ation an d Order,

Case 14-3506, Document 35, 11/26/2014, 1380999, Page18 of 103

-,

Case 1:90-cv-05 722 -RMB-RLE Document 1588 Filed 11114/14 Page 3 of 3

ZUCKERMAN SPAEDER

LJ.J'

Han . Ric hard M. Berman


November 14, 2014
Page 3
The parties have also agreed LO remove the fo ur subparag ra phs that were added to paragraph
5.j.iv in the May 27 , 2014 pro posed Stipulati on and Order. Upon renection and di scussion

between the pan ies, we agree with Your Honor that the inclusion of th ese subparagraphs that laid
o ut when an individual could not run for o ffic e was unnecessary . Thus, the newly proposed

Stipulation and Order excises these provision s from paragraph 5.j.iv.


The parties respectfully submit this revi sed Stipulati on and Order and hope that it has met all of
Your Honor's concems in order to serve as a productive go verning document for the District
Council and the Benefit Funds to continue progress ing to a point where day-to-day oversight is
no longer necessary.

Respectfully submitted,
lsi

Barbara S. Jones

cc:
Raymond McGuire
Benjamin H. Torrance
Tara M. LaMorte
lames M. Murphy
Dennis M. Wal sh
Bridget M. Rohde

Case 14-3506, Document 35, 11/26/2014, 1380999, Page19 of 103

Att. B

Case 14-3506, Document 35, 11/26/2014, 1380999, Page20 of 103

Case 1:90cv-05722RMB RLE Document 1592 Filed 11117/14 Page 1 of 5


.'

VIA HAND DELIVERY


Hon. Richard M. Berman
United Stales District Court for the Southern District of New York
Daniel Patrick Moynihan United States Courthouse
500 Pearl SIreet
New York, NY 10007

~~~nlW~

~~l

U
PRO SE OFFICE
NOV 1 7 1nl4

September 17 , 2014

Re: United States v. District Council, No. 90-cv-5722

Dear Judge Berman:


We writing to the court to object to the proposed Stipulation and Order submitted by
the District Council, the Benefit Funds, and the government on November 14,20 14 . As thi s
Court is aware, we are currently appealing this Court's September 10,2014 Opinion and
Order which held that our appeal of the Review Officers 2012 removal ofus from our elected

positions was moot because there was no effective reliefwhlch this Court could granted to us.
During our appeal, the Review Officers position has been that we were not entilied to
due process be<:ause " [tlms is not a disciplinary charge brought against any of these men.

Their union membership rights are not in any way affected." United SUJtes

Y.

Dis!. Council of

New York City, 90 CN. 5722 RMB, 2012 WI.. 5236577 at N5 (S.D.N.Y. OCL 23, 2012).

A position whicb was reiterated by the government in their submission to the Court of
Appeals " [a)lthough Nee's and Messinetti's tenures as officers were ended by the Review
Officer's veto, they lost no Ullion nghts gomg forward, mcluding the nght to nm for electIOn

again." Reply Brief, 12-4883 Doc. # 40, pg. 39.


And while another defendant Joesph Passero was appealing the action brought against

him by the Review Officer, he was also nmoing for the same office that he had just been

removed from and neither the Review Officer nor the Court gave any indication that this
should be considered to be inapt. In this Court' s Decision and Order entered on April 30,

-J

.,,

Case 14-3506, Document 35, 11/26/2014, 1380999, Page21 of 103

Case 1:90cv0572 2 RMBRLE Document 1592 Filed 11117114 Page 2 of 5

2013, the Court noted that "Passero is currently running for President of Local Union 1556 in
the Union 's June 2013 elections." 90-cv-05722-RMB-THK Document 1329 Footnote 2
Yet at the September 30 conference this Court took the position if one had been
removed from office by the Review Officer, one was automatically barred from running for

elected office"- you have the authority to not qualify someone who is running fOT office.
Right? They have to go to you. You screen them and you determine. And there's broad
authority and broad language that gives you the ability, non-reviewable duty to do thal. In the

proposal, there's a list of three or four things DOW that are I guess sort of automatic. I don't
understand, honestly, why we need those things, either, added." (Hr. Tr.Sept. 30, 2014 , pg.
27, 1319)(emphasis added)

In their November 14, joint submission the parties reiterated this new position: "The
parties have also agreed to remove the four subparagraphs that were added to paragraph 5.j.iv
in the May 27, 2014 proposed Stipulation and Order. Upon reflection and discussion between
the parties, we agree with Your Honor that the inclusion of these subparagraphs that laid out
when an individual could not run for office was unnecessary. Thus, the newly proposed
Stipulation and Order excises these provisions from paragraph 5.j.iv."

Since it is readily apparent that if the proposed Stipulation is implemented, and


regardless of any actual construction used in that Stjpulation, Doe of the net results for us will

be that we are barred from running for elected office in our unioD. We do not believe that it is
possible to maintain these polar positions, that we are now barred from running for elected
office as a result of the Review Officers action and that somehow on September 10, 2014 our
appeal was moot because the Court had no effective relief which it could gnwt us. Being

barred from ruo.oing for elected office is sufficient in and of itself to preserve our appeal as a

live controversy.
As we pointed out in our submission on May 27, the Supreme Court has held that

"[t)he filing of a notice of appeal is an event ofjurisdictional significance-it confers


jurisdiction on the court of appeals and divests the district court of its control over those

- 2

Case 14-3506, Document 35, 11/26/2014, 1380999, Page22 of 103

Case 1:90-cv-0572 2-RMB-RLE Document 1592

~iled

11/17/14 Page 3 of 5

aspects of the case involved in the appeal." Motorola Credit Corp. v. Uzan. 388 F. 3d 39,53

(2004Xciting Griggs v. Provident Consumer DiscOWlt Co., 459 U.S. 56, 58, 103 S_Ct_ 400, 74
LEd.2d 225 (1982.
And that many circuits have recognized the logic of this rule which "promotes judicial
economy for it spares [the) court from considering and ruling 00 questions that possibly will
be mooted by the decision of the court of appeals [and] promotes fairness to the parties who
might otherwise have to fight a confusing "two front war" for no good reason, Shewchun v.
United Stales. 797 F2d 941, 943 (11th Cir.1986), avoiding possible dupUca1ion and

confusion by allocating control between forums." US v. Ledbetter, 882 F. 2d 1345,1347


Court of Appeals, 8th Circuit 1989.

It is our positioo that this Court has

DO

jurisdiction to now enter into a Stipulation

which bars us from elected office when the court has already ruled that there was

DO

judicial

relief available for us 00 September 10_

The District Council does not have the authority to grant the proposed monitor the authority
to summarily remove elected officers of a separate legal entity who are not a party to this

matter.
Officers of constituent locals are elected to their office and their tenns and powers are

set forth in the International CanstiMioo, and as such they are neither employees nor officers
of the District Council. The District Council has no authority to effect the tenure of the

officers of the local unions affiliated with the District Council. "A union constitution is a
contract between labor organizations. As such, in an action brought under 29 U.S.c. 185, it

may be enforced Like any other contract." Local Unions 20 v. Carpenters, Joiners ofAmerica,
223 F. Supp. 2d 491,498 (SONY 2002). (citation omitted).
Neither Local 157 oor any of the other locals affiliated with the District Council are a
party to this matter. "[I)t is a principle of general application in Anglo-American

jurisprudence that

ODe

is not bound by ajudgment jnpersonam in a litigation in whicb he is


-3

Case 14-3506, Document 35, 11/26/2014, 1380999, Page23 of 103

Case 1:90cv05722RMBRLE Document 1592 Filed 11117114 Page 4 of 5

not designated as a party or to whicb be bas Dot been made

party by service of process. This

rule is part of our "deep-rooted historic tradition that everyoDe should bave his own day io

court A judgment or decree among parties to a lawsuit resolves issues as among them, but it
does not conclude the rights of strangers to those proceedings." Martin v. Wilks , 490 U.S.
755,761-2, (l989)(ioternaJ citations omitted)
The Council's only authority in regards to the removal ofa local union's officer is the
power to conduct trials of members within its jurisdiction subject to Secdons 51 and 52 of the
Constitution, and does Qot extend so far as to allow the Council to create a tribunal whicb

does not meet these strictures, "A District Council or Regional Council shall have the power
to conduct trials of members or Local Unions within its jurisdiction who have been cbarged
with violating the Constitution and Laws, violating the District Council or Regional Council

Bylaws andfor Trade Rules or violating the Trade Rules of a Local Union when such
violation occurs within tbeDistrict Council's or Regional Council's jurisdiclion, and impose

sucb penalties as they may deem the ease requires, subject to Sections 51 and 52 and the right
of appeal under Section 53 . (Constitution,

26F)

The UBC Constitution does not allow for the summary removal of officers and
describes only one method to effect the removal of an officer whereby "[alny nfficer may be
removed after due trial upon cbarges preferred in conformity with Sections 51 and 52 of the
Constitution and Laws."

(~32)

The UBC Constitution further provides that "[tlb. regular

terms of elected officers shall be three years in Loeal Unioos ..... or until their successors are
elected, qualified and iostalled,"(~ 31 C).~ 51 lists the various cbarges whicb may be brought
against a member and ~ 52 describes the process which any officer can expect before they can

be lawfully removed from office prior to the conclusion of their three year term. That officer
is entitled to a fair and impartial bearing, with a jury of their peers; to be present at all times

when evidence is being received; to have the accuser~s case presented

fi.rst~

to COnfrODl and

cross-examine witnesses and recall witnesses; to caU witnesses of their own; and
closing statement.
-4

to

make a

Case 14-3506, Document 35, 11/26/2014, 1380999, Page24 of 103

'.

Case

1~90 cv05722RMB.RLE

Document 1592 Filed 11/17114 Page 5 of 5

We are also mindful of the fact that we are not lawyers, and that the courts have

recognized that pro se submissions are to be "to be liberally construed.," and "bowever
inartfully pleaded, must be beld to less stringent standards than formal pleadings drafted by
lawyers." Erickson v. Pardus, 551 U.S. 89, 93-94, 127 S.C!. 2197, 167 LEd.2d 1081 (2007)
(per curiam) (citing Estelle v. Gamble, 429 U.S. 97, 106,97 S.C!. 285, 50 L.Ed.2d 251
(1976, and appreciate the extra effort which might be required of the Court in dealing witb

pro se submissions.
Conclusion
This Court of Appeals currently holds jurisdiction over all parts of this matter whicb
we are appealing, it cannot be the case that we are both barred from office because we were
removed from office and at the same time unaffected by that removal.
The authority of the District Council is circumscribed by tbe authority expressly

granted to it, and that does not include the authority to grant anyone the authority to remove
elected officers of the locals in a manner which is contrary to the Constitution. Unless the

District Council can show the source of its authority to bind the Local Union, !his court most
t which is in excess of the District Councils authority.

t 1-1/-lf
Patrick Nee
6818 52,d Drive

Maspeth, New York, 11378.


Telephone (718) 593 6414
Email pa~nee@yaboo.com

J...6N1I>f'essinetti
Date
Pacific Avenue
Lawrence, New York, 11559.
Telephone (516) 808 2928
Email piedpiper608@yaboo.com

cc:
Raymond McGuire
Benjamin H . Torrance
Tara M. LaMorte
James M. Murphy
Dennis M. Walsb
Bridget M. Rohde

-5

Case 14-3506, Document 35, 11/26/2014, 1380999, Page25 of 103

Att. C

Case 14-3506, Document 35, 11/26/2014, 1380999, Page26 of 103

Case 1:90-cv-OS722-RMB-RLE Document 1596

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

---------------- - -X

UNlTED STATES OF AMERICA,


Plaintiff,
90 Civ. 5722 (RMB)

-against-

ORDER

DISTRICT COUNCIL OF NEW YORK CITY

and VICINITY OF THE UNITED

BROTHERHOOD OF CARPENTERS and

JOINERS OF AMERlCA, et aI.,

Defendants.

------------------

--X

Based upon the record here~ including without limitation , the hearings held on
September 30, 2014 and November 18,2014, and the objections to the proposed Stipulation and

Order Regarding AppOlntment ofan independent Monitor and to the tinaJ venian of the
Stipulation and Order submitted by Mssrs. Patrick Nee and Levy Messinetri on May 27, 20 14
and on November 17, 2014, respectively. the Court, on November 18,2014, approved the
Stipulation and Order Regarding Appointment of an Independenl Monitor between the above
captioned parties.

Dated: New York, New York


Novernber21,2014

RlCHARD M. BERMAN, U_S.D-I.

Case 14-3506, Document 35, 11/26/2014, 1380999, Page27 of 103

Case 1:90-cv-05722-RMB-RLE Document 1593 Fi led 11118/14

Page 1 of 22

Case 1:90-cv-05722-RMB-RLE Document 1588-1 Filed 11114114 Page 1 of 20

UNITED STATES DISTRlCT COURT


SOUTHERN DISTRlCT OF NEW YORK

MEMO ENDORSED

--,

"I'

Plaintiff,

90 Civ. 5722 (RMB)


v.

STIPULAnON AND ORDER


REGARD{NG APPOINTMENT OF
AN lNDEPENDENTMONnOR .

DISTRlCT COUNC1L OF NEW YORK CITY


AND VICINITY OF THE UNITED
BROTHERHOOD OF CARPENTERS AND
JOINERS OF AMERlCA, el ai,

, , JC SO':\
,: ! )OCU"-' : :. I

~LE(,

Defendants.
-------

'"

I ', '"

D(V

t..' ' '

". \ \

. :' .

. i
I

'

IIlllll'ljl

t.:onsent Decree (the Consent ~


. I rem6:iles pfovrsiorts of the"
Racketeer lnftuenced and Corrupt Organizations Act, 18 U.S.C. 1961 et Jell. , between plaintiff
W1fEREAS, on March 4, 1994, the Court approved
Decree") in the above-captioned action, brought under th

the United States (the "Govrnlment") and defendants, including the District Council of New York
City and Vicinity of the United Brotherhood of Carpenters and Joiners of America ("District

Council"). The Consent Decree among other things pennanently enjoined all currenl and future
officers. employees, and members of the DistItc.t Council and its constituent 'oc.a1s from engaging
in any act of racketeering activity as defined in 18 U.S.C. 1961 ; knowing'y associating with any
member or associate of any La Cosa Nostra crime family or any other criminal grouP. or with any
person prohibited from participating in union affairs (coUet;ovety, "barred persons"); and
obstrucling or interfering with 1~ work of the officers described in the Consent Decree;
WHEREAS, following a series of events including the AUgust 2009 indictment of Michael
Forde., who was the District Council's Executive Secretary-Treasurer and a trustee of the Benefit
Funds. as well as local union officials, shop stewards, and f!I contractor, by Order dated June 3,
2010, the Court entered a Stipulation between the United States and the District Council and
Benefit Funds wbich created the position ofR.eview Officer, finding such an officer essential to tbe
eradication of corruption and rackelecring as they affect union carpenters and union employers;

WHEREAS, from June 3, 2010, through the present, during the term. of the Review Officer,
the District Council has implemented. numerous reforms, and the Government and the Review
Officer acknowledge that the District Council has made significant progress in advancing the
objectives of the lune 20 10 Stipulation and Order.

WHEREAS, the United States and the District Council agree that the continuing pr~en.e
and activity of an independent monitor, albeit with more limited oversight authority as detailed
below, is advisable in order to afford the District Council (he opportunity to demonstrate that it can
sustain the reform measures that have been implemented and operate free from the influence of
racketeering and corruption;

Case 14-3506, Document 35, 11/26/2014, 1380999, Page28 of 103

Case 1:90-cv -05722-RMB-RLE

Document 1593 Filed 11/18/1 4

Page 2 01 22

Case 1:90-cv-05722-RMB-RLE Document 1581H Filed 11114114 Page 2 of 20

WHEREAS, the Review Officer appointed under the June 3, 2010 Stipulation and Order has
infonned the United States and the District Councillhat he does not intend to serve in that capacity
beyond December 31,2014, but a F ' with the United States and the District Couo<il thai thl

--.:_" ,. - . r ~rr';eA' tJ on in~,p.nd'nl OUUIIuVvullliru lflUDllUf IJ pruu,n~ 41IU


WHEREAS. wbile the Government and lite Benefit Funds disagree on the question of
whether the Benefit Funds are bound by the Consent Decree and the effect of this Court' s L996
order in United States Y. Disln'" Council. 1996 WL 221584 (S.D.N.Y. May 2, 1996), the
Government and the Benefit Funds agree that by consenting to this Stipulation and Order the
Benefit Funds do not C()ncede the applicability of the Consent Decree to them, and further agree
that the Benefit Funds' consent to this Stipulation and Order may not be used in any way to support
the argument that the Benefit Funds are or should be bound to the Consent Decree; now, therefore,

IT IS HEREBY ORDERED, upon the stipula<ion and agretment oftbe Govemrnen~ the
District Council, and the Benefit Funds, as follows:

I.

D~fiDido.s .

As used in this Stipulation and Order:

"Benefit Funds" means the New York Ciry District Council ofCarpeoters Pension
Plan. the New Yort. City District Council of CarpenterS Welfare Fund. the New York
City District Council ofCart>enttrs Vacation Fund (now part ofthe Welfare Fund), the
New York City District Council of Carpenters Annuity Fund, the New York City
District Council of Carpenters Apprenticeship Journeymen Retraining Educational and
Industry Fund, the New York City CaqJenters Relief and Charity Fund, the New York
City District Council of Carpenters Scholarship Fund (part of the Welfare FUlId), and
any other fund or plan established now or in the future fur the benefit ofmembers of the
District Council pursuant to stttion 302(c)(S) ofthe Labor Management Relations Act,
29 U.S .C. 186(cXS).

b.

''District Council" means the District Council ofNew York C ity and Vicinity of the
United Brotherhood Of Carpenters and Joiners of America. As used in this Stipulation
and Order, "District Council" includes all constituenllocaI unions, as well as the New
YorX City District Council ofClUpeTlters Retirement & Pension Plan for Officers and
Employees and any other fund or plan established now Or in the tiJrure for the benefit of
the District Council's employees or officers as defined in 29 U.S .C . 1002(3).

c.

"Job Referral Rulcs" means the job referral rules established by the Consent Decree. as
modified by any subsequent order of the Court.

d.

"Member of the District Council" means any person who is a member of any union or
labor organization thai constitutes part of the District Co uncil.

2. Authority of the Cour!. The Court bas authority to enter this Stipulation and Order
pursuant to its inherent power, including the inherent power to enforce. ensure compliance with,
aJld modify the Consent Decree and the 2010 Stipulation and Order, Rule 60(b) of the Federal
Rules of Civil Procedure; the Court' s contempt powers; and 18 U.S .C. 1964 .

Case 14-3506, Document 35, 11/26/2014, 1380999, Page29 of 103

Case 1:90-cv-05722-RMB-RLE Document 1593 Filed 1JJ18/14 Page 3 of 22

Case l:90-cv-05722-RMB-RLE Document 1588-1 Filed 11/14114 Page 3 of 20

3.

AppoiotmeDt of todepeadeot Moaitor. Pursuant to the Court's OrderofOctober 1, 2014 :


a.

Dermis M. Walsh, Esq., the Review Officer appointed under the June 3, 20 10

~i:nul\lt;nn ,nJ Order.

w:n Mnt:nlle!l.E: OAv!!'>Ul ('\~ ......., /lind .."'.......:"....11 n'.tk":+y ... f.L. y

Independent Mooitor described in this Stipulat ion and Order until December 31, 2014 .

b.

Glen G. McGorty, Esq.. of the finn Crowell & Moring, is hereby appointed as
Independent Monitor, to begin his term on January 1, 2015, and 10 begin his transition

responsibilities on November I, 2014,


c.

4.

BegiMing November 1, 2014, Mr. Walsh, as the Review Officer. will work with the
Independent Monitor to prepare for the transfer of duties and responsibilities from the
Review Officer to the Independent Monitor.

Role of tbe Di!trict Couocil and the Benefit F.ods.


8.

District Council: It remains the responSibility of the District Council to (i) take all
reasonable steps to eliminate criminal elements, criminal activities, racketeering, and
corruption from any part ofthe District Council and its operations; (ii) maintain and run
the District Council democratically and without unlawful influence; and (Ui) comply
with and work in good faith to achieve the terms and objectives of the Consent Decree,
this Stipulation and Order and any pending matter.

b.

Benefit Funds: It remains the responsibility of the Benefit Funds to (i) take a1l
reasonable steps to eliminate criminal elements, criminal activities, racketeering, and
corruption &om an)' part ofthc Benefit Funds and their operations; lii) maintain and
nm the Benefit Funds without unlawful influence; and (iii) comply with and work in
good faith lo achieve the tenos and objectives ofmis Stipulation and Order with respect
to the Benefit Funds . Neither the appointment of the Independent Monitor nor the
consent of the Bene fit Funds to this Stipulation and Order diminishes in any way (he
fiduciary responsibilities of the trustees ofLhe Benefit Funds.

c.

The appointment o rthe tndependent Monitor provided in this Stipulation and Order is
intended,lo part, 10 pennit the District Council and the Benefit Funds to demonstrate
their fulfillmem of the goals specified in Ihis paragraph 4, and to permit the

Independent Monitor to assess whether they have ac<:omplishcd those goals and
achieved the objeaives of this Slipulation and Order, the June 2010 Stipulation and
Order, and the 1994 Consent Decree.
5.
AQlbority of J.depudent Monitor , The Independent Monitor has the following
authority, rights, and responsibilrties:
a.

Geuf1l1 Autbority. The Independent Monitor has the authority to ensure compliance
with the injunctions set forth in the Consenl Decree; to investigate the operations of the
District Couneil and the operations of the Benefit Funds. including but n01limiled to
investigating allegations of corruption and wrongdoing by officers, representatives,
agents, c:tnployees, members, and trustees; to bring d isciplinary charges against any
District Council off-.cers. representatives. agents, employees, or members; and to
exercise the authorities, rights, and powers described below. The reference in this
3

Case 14-3506, Document 35, 11/26/2014, 1380999, Page30 of 103

Case 1:90 -cv-0 5722-RMB-RLE Document 1593 Filed 11/18/14 Pag e 4 of 22


Case 1:90-cv.QS722-RMB-RLE Document 1588-1 Filed 11114/14 Page 4 of 20

paragr.aph to CJUstees oflhe Benefit Funds is to be construed as referring to the trustees


solely in their capacity as trustees of the Benefit Funds.

I. ni1Mcl rn,,,nMh 1" eYl!,eic:ina hit r"UlIt'I'C 1I"d. "'~r""Q;k;\:+;.", ... J.o~~ m
this Stipulation and Order, the Independent Monitor. to the ma.ximum extent
praclicable, should consult with the District Council prior to taking any action
with respect to the District Council. and permit the District Council to act on its
own in the flI'St instance to effectuate the tenns and objectives aftnis Stipulation
and Order. The District Council. in tum, must consult with the Independent

Monitor as 10 what actions are advisable to effectuate the terms and objectives of
this Stipulation and Order. However, with respect to any matter as to which rhe
lndepeodent Monitor has authoriry under tbis Stipulalion and Order, the
Independent Monitor need not consult with the District Council, or permit the
District Council 1.0 act first., regarding any matter as to which the Independent
Mon itor. in his sole. unfettered. Md ullJeviewable discretio~ detennines such
consulwlo n or permission is inadvisable. In no circumstances will the failure or
declination of the Independent Mo nitor to COnsult with the District Council as to
any maUer be deemed a violation Or breach of this Stipulation and Order.
U.

Benenr Funds: In exercising his powerS and responSibilities as described in


thi s Stipulation and Order, the Independent Monitor, to the maximum extent

practicable, should oonsult with the Benefit funds prior to taking any aClion with
respect to the Benefit FWlds, and pennit the Benefit Funds to act on their own in
the first instance to effecruatc the terms and objectives ofWs Stipulation and
Order. The Iknefn Funds, in turn, should consult to the maximum extent
practicable with the Independent Monitor as to what actions are ad\l is.s.ble to
effectuate the tem1s and objectives ofthis Stipulation and Order. However. with
respect to any matter as to wh ich the independent Monitor has authority under
thi s Stipulalion and Order, the Independent Monitor need not consult with the
Benefit Funds., Or pennit the Benefit Funds to act first, regarding any maner as to
which the Independent Monitor, in his sole, unfettered, and unreviewable
disc.re\ion, determines such conSultation or permission is inadvisable. In no
circumstances will the fa ilure or declination of the Independent Monitor to
consult with the Benefit Funds as to any matter be deemed a violation or breach
of this Stipulation and Order.
b.

Review lad Oveni&bt Aurbority. The Independent Monitor has review and

oversight authority with respect to the following matters:

i.

With respect to the District Council:

(1)

The Independent Monitor has the authority to review all expenditures and

investments.
(2)

The Independent Mo nitor has the authority to review all contraclS (excepl

for col lective bargaining agreements).


(3) The Independent Monitor has the autilorlry to review the persons currently
4

Case 14-3506, Document 35, 11/26/2014, 1380999, Page31 of 103

Case 1:90-cv-OS722-RMB-RLE Documeot 1593 Filed 11118/14 Page 5 of 22

Case 1:9()-cv-OS722-RMB-RLE Document 1588-1 Filed 11114/14 Page 5 of 20

holding office or employmem and all proposed appointments to office or


employment. This provision does not govern the election of District Council
officers. as provided for in pa.r3gnrph 5.j of this Stipulation and Order.
(4) The Independent Monitor has the authority to review all proposed changes
to the by-laws, and any other rules, policies, Or practices.

ii.

Wi.th respect to the Benefit funds:


(I) The Independent Monitor has the authority to review all expenditures and
investments. provided, ho~ver, that in exercising this authority, the Independent
Monitor may not question the Funds' reliance on tbe advice given to them by
professionals retained to ad\lise the Funds on their investments, unless the
Independent Monitor has reason to believe \hal the Funds' reliance on such
professionals is tainted by corruption or other improper influences.
(2) The Independent MonitOc has the authority to review all contracts.
(3) The lndependem Monitor has the authority to review the persons ctirrentJy
holding office or employment. including Benefit Fund trustees., and all propos!
appointments to office or employment, including Benefit Fund truStees.
(4) The 1ndependent Monitor has the authority to review aU changes to the
Benefit Funds trust agreements, and any other rules, poliCies, or practices.

Ill.

Upon reviewing any matter described in paragraphs S.b.i and 5.b.ii, the
Independent Monitor may determine that the matter reviewed (a) constitutes or
fu.rtlJers an act of racketeering as defined in 18 U.S .C. 1961; or (b) furthers or
contributes to the association, directly or indirectJ)', of any member, employee,
officer, trustee, or representalive oftbe District Councilor the Benefit Funds with
any barred person; or (c) is contrary to or violates any law or Court order entered
in this case; or (0) is contrary to any fiduciary responsibility imposed by
29 U.S.C. 501 Of the Employee Retirement Income Security Act, 29 U.S.C.
1001 el seq. ("ERlSA"); or (e) is inconsistent with the objectives of this
Stipulation and Order.
(I) Upon such a determination in the case ofthe District Council, following
inves1igation by the Independent Monitor, the fndepe:ndent Monitor must
give written notice to the District Council and, if 8.9plicable, the individual
to be removed from office or e:mployment, that the expenditure, investment,
contract, continued position in office or employment, proposed
appointment to office or emplo}'Tl1ent, proposed change to the by-laws, or
other rule:, policy, Or practice meets one of the conditioos speci6ed in ,bis
paragT3fJh S.b,iii(a)(e). The Independent Monitor wUl provide the District
Council and, if applicable, the individual whose continued position in office
or employment is al issue. an opportunity to be heard . The District
Council and, if applicable, the individual, then has five business days to
provide a response to the Independent MonitOr. If !.he DiStrict Council or

Case 14-3506, Document 35, 11/26/2014, 1380999, Page32 of 103

Case 1:90-cv-05722-RMB-RLE Document 1593 Filed 11118114 Page 6 of 22

Case 1:90-cv-05722 -RMB-RLE Document 1588-1 Filed 11114114 Page 6 of 20

the individual fails to provide a response wrthin five business days, or,
following that response, the Independent Monitor, in his discretion.
determines that a reasonable basis for the expenditure, investment, contract,
continu~ position in office or employment, proposed appointment to office
or employment, proposed c.hange to the by\a\VS., or other rule, policy, or
practice has not been established, then the lndependent Monitor will present
his evidence and recommendation for action to the Executive Committee.
The Executive Committee will determine ifthere is sUbsWltiaJ evidence to
support the conclusion of the Independent Monitor and will make a flnal
decision on whether the action should Or sbould nOI be taken or whether an
individual should or should not be removed from office or employment or
face other action. The aggrieved party, whether it be the Jodependcol
Monitor, District Council. or individual facing removal from office or
employment, may petition the Court for review of the final decision of the
Executive Committee. The other parnes, and the Government, witl be
given notice and an opportunity to be heard regarding such petition. In
reviewing petitions for review arising from paragraph S.b. the Court will
afford the recommendation of the Independent M onitor the same level of
de ference afforded to final agency action under the Administrative
Procedure: Act.
In his sale discretion, the Independent Monitor may require that, from the
time he provides the initial written notice described in this paragraph to the
time the Court decides the Independent Monitor's petition for review or the
Independent Monitor declines to pursue such a petition, the expenditure,
investment. contract, proposed appointment to office, propOsed cbange to
the bylaws, or other rule., po licy, or practice at issue mus t be held in
abeyance---except that ifthe District Council determines, with the advice of
its counsel, that to do so would violate a legal obligation or cause significant
financial risk, the District Council may provide prompt notice to the Court.,
the Government, a.nd the Independent Monilor, men may proceed with the
action.
(2) Upon such a detennination in the case of the Benefit Funds, following
investigation by the Independent Moni lor, the Independent Monitor must
give written notice to the Benefll Funds that the expenditure, investment,
contract. continued position in office Or employment, proposed
appointment to offi ce or employment., or proposed change to the Benefit
Funds trust agreement, rule, policy, 0( practice presents a reasonable basis
to believe that the ex.penditure, investment. contract, continued position in
office or employment, proposed appointment to office or employment, or
pro]Xlsed change to the Benefit Funds trust agreement, Nle; policy, or
practice meets one of the CQllditions specified in this paragraph
S.b.ii i.(a)-(e). The absence of such notice may not be construed to
establish a presumption that such cooditions are not present.

Case 14-3506, Document 35, 11/26/2014, 1380999, Page33 of 103

Case 1:90-cv-05722-RMB-RLE Document 1593 Filed 11118114 Page 7 of 22


Case 1:90-cv-05722-RMB-RLE Document 1588-1 Filed 11114/14 Page 7 of 20

C.

Access to lofonnatio.. The Independent Monitor has the authority to take such
reasonable steps that are lawful and necessary in order to be fully infonned about the

activities of the District Council and the Benefit Funds. Specifically, to discharge the
duties and responsibilities set forth in this Stipulation and Order, the Independent
Monitor must have access to infonnation as foUows:
I.

II.

UI.

The Independent Monitor has the right to attend all meetings ofthe District
Council. any governing body or committee of the District Council. or the District
Council membership.
The Independent Monitor has complete and unfettered access to, and the right to
make copies of, all books, records. accounts, correspondence, files and other
documents of, the District Council and the Benefit Funds. including, without
limitation, all books, records, accounts, correspondence, files, and other
documents that are in the possession or control ofthird parties.
The Independent Monitor has the right to compel audits and accountings of the
assets of the District Council. The lndependent Monitor has the right to request
that the Benefit Funds' trustees conduct audits and accountings of the assets of
the Benefit Funds; the Benefit Funds may object to such a request, in which case
the Independent Monitor or the Government may petition the Court to compel the
audit or accounting. and the Benefit Funds will be given notice and an
opportunity to be heard regarding such petition.

iv. Except as he determines it necessary in good faith in connection with his


responsibilities under this Stipulation and Order, the Independent Monitor will
make 811 reasonable efforts to preserve the confidenti81ity, if any, of information
and documents to which he has access.

d.

Investigative Powers. The Independent Monitor has the following in"estigati"e


powers:

i.

The Independent Monitor has the right to interview, and to take and compel the
sworn statement or sworn in-person oral deposition of any officer, agent.,
representative, employee, trustee, or member of the District Council or the
Benefit Funds concerning any matter within the Independent Monitor'S authority
under this Stipulation and Order, provided that the person to be examined
receives reasonable advance norice of the interview or deposition, and may be
represented by legal counsel of his or her choice. Notice will 81so be provided to
the District Council through its counsel, unless the Independent Monitor
determines that such notice would be prejudicial to his investigation, in which
case the Independent Monitor must pro"ide the Court and the Govemment with
justification for conducting the interview or deposition without such notice.
Nothing in this Stipulation and Order restricts the ability of the Benefit Funds or
the District Council to provide counsel to any person if the Benefit Funds or the
District Council chooses to do so.

Case 14-3506, Document 35, 11/26/2014, 1380999, Page34 of 103

Case 1:90-cv-05722-RMB-RLE Document 1593 Filed 11118114 Page 8 of 22

Case l:90-cv-05722-RMB-RLE Document 1588-1 Filed 11114114 Page 8 of 20

ii. The lndependent Monitor has the right. with authorization of the Court. to issue
subpoenas for testimony or documents from any person or entity. Application to
the Court for authorization to issue a subpoena must be made on notice to the
Govemm~t. Notice must also be provided to the Dlsuict Councilor Benefit
funds. as applicable, unless the Independent Monitor determines that such notice
would be prejudicialla his investigation. in which case the lndependenl Monitor
must provide the Court and the Government with justification for issuing the

subpoena without such nolice.


111.

e.

Nothing in this Stipulation and Order diminishes in any way the Independent
Monitor's authority to take any other lawful action to be futly infonned about the
activities of the District Council and the Benefit Punds and other persons or
entities who are compensated for services rendered to the District Councilor the
Benefit Funds as such activities relate to the District Council or the Benefit
Funds, respectively, whenever those activities occurred.

Rererral of Matten to tbe


I.

JDd~DdeDt

MODitOf.

Represenuuives, officers. and employees of the Distri~ Council, or employees of


the Benefit Fund s, must prompC ty repOrt to the Independent Monitor (I) any
known or suspected violations of the Consent Decree, including any Irnown or
suspected violations of the Job Referral Rules; (2) any known or suspected
violations ofiocal, stale, or federal law (not including labor law or ERISA, as
provided for in the next clause) related to the activities of the District Councilor
the Benefit Funds or the employment of District Council members; (3) any
known or suspected criminal violations of labor law or ERISA by any person
associated with the District Council or the Benefit Funds, including employeT5 of
District Council members; (4) any known or suspected violations of any Court
orders entered in this case; and (5) any Imown or suspected violations of any
District Council collective bargaining agreement pertaining to payment o f wages
or benefits or the Wlion security clause. Nothing in this paragraph imposes an
affirmative obligation on any person to learn the contents ahny law, court order,
consent decree, Or collective bargaining agreement.

Ii.

The District CounCil Or the Benefit Funds may also elect to refer any other mattr:r
to the Independent Monitor. In all cases where the District Council refers a
matter to the Independent Monitor, the Independent Monitor, at his election, may
accept the maner for investigation or may decline to investigate. In the event the
Independent Monitor informs the District Council that he will investigate a
matter, the District Council must take no action with respect to the matter unless
authorized to do so by the Independent Monitor. lfthe Independent Monitor
declines the matter for investigation, the District Council can investigate if it so
chooses. In all cases where the Benefit Funds refers a matter to the Independenl
Monitor, the Independem Monitor, at his election, may accept the matter for
investigation or may decline to investigate. In the event the Independent
Monitor accepts the matter for investigation, the Benefit Funds will aJse notify
the lndependenc Monitor whether the Benefit Funds will take action with respect
to the matter and, if the Benefit Funds elect to take action, the nature of the action
8

Case 14-3506, Document 35, 11/26/2014, 1380999, Page35 of 103

Case 1:90-cv-05722-RMB-RLE Document 1593 Filed 11118/14 Page 9 of 22

Case 1:90-cv-05722-RMB-RLE Documen11588-1 Filed 11114114 Page 9 of 20

the Benefil Funds PfOJXlse 10 take. I.n {he evcor the Independent Monitor
disagrees with the Benefit Funds' decision concerning whether to take action. or
disagrees with the nature of any action the Benefit Funds propose to take, the
Independent Monitor may petition the Court for relie~ and the Benefit Funds will
be given notice and an opportunity to be heard regarding such petition.

If the
Independent Monitor declines the matter for investigation, the Benefit Funds can
investigate il if they so choose .

f.

Disciplinary Autbority. The Independent Monitor has the authority to ensure that the
District Council maintains fair and effective procedures to discipline officers,
employees, agents. representatives, or members of the District Council and its
constituent locals for misconduct. as embodied in the "District Council of New York
and Vicinity Trial Procedures" approved by the Delegate Body on August 28, 2013,
and to ensure that such procedures are being cooducted in 8 fair and effective way.

i.

If the Independent Monitor determines that the disciplinary process is not being
coodUC1ed in a fair or effective way. he may file a motion with the Court to
require the District Council to make the changes the Independent Monitor
detennines are ne<:essary, and the District Council will have an opportunity (0
respond.

ii.

The Independent Monitor has the authority to bring disciplinary prOceedings

under the aforementioned Trial Procedures.

g. Asseismeots, Cbanges, aDd RerommendarioJU. Consistent with the provisions of


paragraph 5.a:

i.

The Independent Monitor must periodically conduct an assessment of the overall


functioning and effectiveness of the organizational changes and policies.,
procedures, and systems implemented by the District Council and Benefit Punds
since entry oft:he June 201 0 Stipulation and Order. The Independent Monreor
will examine the District Council' s progress in implementing its infonnation
technology upgrade and its prOgress in implementing enhanced business
practices and procedures.

ii.

The Independem Monitor may st\ldy and make recommendations concerning any
other factors, practices, and prOCedures that will effectively prevent, deter, detect,
and address wrongdoing and corruption by or reiaJed to the DistriC1 Council, its
members, and the Benefit Funds.

iii. lmplema:ltation:
(1)
With respect to any recommendations the Independent Monitor makes
concerning the DistriC1 Council under this paragraph 5.g, the Independent Monitor
must apprise the Government and the District Council of any such
recommendations. The Independeot Monitor may, in consultation with and witb
the consent of the Government and the District Council, implement such
recommendations. In the event the District Council does not consent to

Case 14-3506, Document 35, 11/26/2014, 1380999, Page36 of 103

Case 1:90-cv-05722-RMB-RLE Document 1593 Filed 11118114 Page 10 of 22

Case 1:90-oJ-05722-RMB-RLE Document1588-1 Filed 11114/14 Page 10 of 20

implementation afthe Independent Monitor's recommendations as required by the


prior sentence, the Independent Monitor may petition th.e Coun to require the
District Council to implement the changes the Independent Monitor deems
appropriate, and the Government and the District Council will be: given notice and
an opportUnity to be heard regarding such petition.
With respect to any recommendations the Independent Mon itor makes
concerning the Benefit Ftmds under this paragraph 5.g, if the Benefit Funds'
trustees do not implement the recommendations, the Independent Monitor may
petition the Court to require the Benefit Funds to implement the changes
recommended by the lndependent Monitor, and the Government and the Benefit
Funds will be given notice and an opportunity to be heard regarding such petition.

(2)

wit"

tbe Membersblp. The Independen1 Monitor may distribute to


h. Communication
the District Council membership wrinen reports describing the activities oftbe
Independent Monitor or any other information he deems advisable. The Independent
Monitor may detennine in his discretion when to publish such reports, and must be
given access to any District Council publication that concerns the affairs of the union,
including The Carpe11lu or any other newsletter, and any District Council web site,
e--mail address list, or other means of electronic communication, to communicate with
the membership. The Independent Monitor may also communicate to the membership
in person, at meetings or othefwi.se. The {ndependent Monitor will generally
endeavor to communicate recommendations regarding policy changes to the District
Council's officers before communicating them to the membership, but is not bound to
do so.
I.

Job Refer-raj Rules. The Independent Monilor must supervise the implementation
and operation of the Job Referral Rules, including implementation and operation of any
stipulated or Court-approved changes to the Job Referral Rules. [fthe Independent
Monrtor detennines that there has been a violalion of the Job Referral Rules., the
Independent Monitor may issue any direction to the District Council as may be
appropriate to remedy the violation .

j.

SupeTVisio. ud CODdKt OfEJectioDS .


i.

Except for the December 2014 District COW1cil elecrion, the authority over
eleclions specified in this paragrapb S.j is to be exercised by the lndependent
Monitor.

it. The fndependent Monitor is empowered to supervise all phases of any union
election conducted by the District Council during his tenure, and to certify the
results of any such election. The term "supervise" as used in this paragraph 5.j
has the meaning ascribed to it in cases arising under Title IV of the
Labor.Management Reporting and Disclosure Act, 29 V.S.c. 4&1 el seq .
iii. The Independent Monitor has the authority 10 prescribe threshold qualifications
---wnsisteDt with section 401 of the Labor-Management Reporting and
Disclosure Act, 29 V.S.c. 481, and 29 C.F.R 452.32 el seq.-for any
10

Case 14-3506, Document 35, 11/26/2014, 1380999, Page37 of 103

Case 1:90-cv05722RMB RLE Documenl1593 Filed 11/18/14 Page 11 of 22


Case 1:9!H:v05722RMBRLE Docume0115881 Filed 11114114 Page 11 of 20

candidate seeking a position as an officer of the District Council, provided that


the [ndependenl Monitor may nol remOve any qualification for office prescribed
by the UBC Constitution as of the date of this Stipulation and Order.
IV.

Any candidate seeking to run for a position as an officer of the District Council

during the Independent Monitor's tenure must ftrst be approved by the


Independent Monitor, who will detennine whether in light of the terms and
objectives ofthe Consent Decree the candidate is qualified to run for office and
represent the union membership. Any such decision by the Independent
Monitor will be final and Don-reviewable.
v.

For the purpose of paragraph S.j.iv, the tenn "officer oCthe District Council"
means the District Council's Executilfe Secretary-Treasurer, President, Vice
Presidenl, Trustees, Warden, and Conductor.

vi. TIle lndependef/t Monitor is empowered to assess the effectiveness and


continuiog applicability of the election rules promulgated under paragrapb S.k.ii
of the lune 2010 Stipulation and Order. To the extent thal the Independent
Monitor determines Ittat any changes 10 the election rules are necessary, the
Independent Monitor will propose changes in accordance with the provisions of
paragraph 5.k.ii of the June 2010 Stipulation and Order. and Section 7 of the
District Council Bylaws.
k.

Retention otRWlrds. Upon the Independetlt Monitor's request. tJle District Council
and the Benefit Funds must notify the lndependent Monitor prior to the destructiQn of
any specified record or category of records described in the records retention schedule.

I.

Reports 10 the Court.


I.

The Independent Monitor may report to the Court whenever the Independent
Monitor deems fit.

II.

Mr. Walsh. as the outgoing Review Officer, must file a final, closing report to the
Court on or before December 31, 2014, including his assessment of the District
Council's progress,. the sustainability of refonT\s that have been implemented. and
recommendations for going forward. The District Council, (he Benefit Funds.
and the Independent Monitor must cooperate with the Review Officer as
necessary for him to complete this report, including by providing access to
records.

iii. The Independent Monitor must file a written report not less than every st." montbs
regarding the Independent Monitor's activities. The reports must include the
Independent Monitor's assessment ofprogress toward achieving the objectives of
this Stipulal:ion and Ord.c;r, the sustainability orrerarms that have been
implemented, and recommendations far going forwaxd. Copies of an reports to
the Court must be timely served on the Government and 00 the District Council
and the Benefit Funds.

II

Case 14-3506, Document 35, 11/26/2014, 1380999, Page38 of 103

Case 1:90-cv-05722-RMB-RLE Document 1593 Filed 11/18/14 Page 12 oj 22

Case 1:90-<:v-OS722-RMB-RLE Document 1588-1 Filed 11/14114 Page 12 of 20

IV.

The rndc:pendent Monitor may provide: drafts of the reports described in this
paragraph 5.1 to the District Council or the Benefit Funds for their input or
response at an appropriate time before the reports are filed.. But the Independent
Monitor may elect not to provide such advance drafts for any reason.

v.

The Independent Monitor's reports as described in this paragraph S.l and


elsewhere in this Stipulation and Order should be filed on the public docket in the
above-captioned case, unless the Independent Monitor detennines that public
filing will be prejudiCial to an investigation or to the Independent Monitor's
activities pursuant to this Stipulation and Order. [fthe Independent Monitor so
determines, the Independent Monitor (a) must file the report under seal, but must
fiJe as much of the report on the public docket as possible without causing the
identified prejudice; (b) must provide the Court. the Government, the District
Council, and the Benefit Funds with ajustificalion for the sealed filing. which
may also be filed under seal if necessary to avoid the identified prejudice; and (c)
must, no less often than once a year. review the sealed report to determine ifthc:
seal is still necessary, and either public ly file the report if the seal is n01 still
necessary or provide notice to the Court. the Govemment, the District Council,
and the Benefit Funds of the justification for confinuing the seal The
Govenunent. the District Council, the Benefil Funds, or any peTscn aggrieved by
me sea1ing or continued sealing of a report may petition the Coun to unseal the
report. and the Court may unseal the (Cport in whole or in part upon a
determination that the interest in unsealing the report outweighs the jUSlification
for sealing it.

vi. Neither the reporting obligation in this paragraph 5.1 nor any ()(her reporting
obligation In this Stipulation and Order precludes the Independent Monitor from
offering, or Ole Government. the Court, the Distric l Council, or the Benefit Funds
from soliciting, the Independent Monitor'S interim advice or opinion on any

matter.
6.
ToUFree Hotlioe. The: tollfree telephone hotl ine described in the June 2010 Stipulation
and Order will be operated by the lndepc:ndent Monitor to solicit and receive allegations of
wrongdoing or colTUption by any person in connection with the operations of the District Council

or the Benefit Funds.


7.
Cooperatio . The District Council and the Benefit FWlCls., including all officers.
employees, trustees, 8J1d members. must cooperate with the Independent Monitor in any matter
undertaken by the Independent Monitor pursuant to th is StipUlation and Order. Failure to
cooperate with the Independent Mon itor is expressly made a violalion of this Slipularion and
Order.
8.

CompedUtiDD, Term, add Hiring AuthDrity.

a.

ffiriag. The Independent Mon itor may employ or engage the services of My
personnel necessary to assist \n the proper discharge of the Independent Monitor's
duties. The Independent Monitor has the authority to designare persons o f his

12

Case 14-3506, Document 35, 11/26/2014, 1380999, Page39 of 103


h

Case 1:90-cv-05722-RMB-RLE Document 1593 Filed 11118/14 Page 13 of 22


Case 1:90-CVlOS722-RMB-RLE Document 1588-1 Filed 11114114 Page 13 of 20

choosing to act on his behalf in performing any of his duties as outlined in this
Stipulation and Order.

b.

CompeasatioD aad ErpeDJeS,


i.

The compenSlltion and expenses of the Independent Monitor, aod oflhe persons
hired under his authority, must be paid by the District Council. The parties
presume that $75,000 per month will be sufficient for the total cost of the
Independent Monitor's activities. If the Independent Monitor determines that he

needs to spend more than that in a given month., he must provide notice as soon as
practicable to the District Council and the Government., but is not constrained
from proceeding with his actions and expenditures.
ii.

For the transition period beginning NovembeT 1,2014, the compensation of the
Independent Monitor must be paid by the District Council. lfthe lndependent
Monitor determines that he needs to spend more than S30,OOO per month during
the transition period. he must provide notice as soon as practicable to the District
Council and the Government

III.

After December 3 I, 2014, Mr. Walsh may also seek compensation for time spent
responding to requests for information or advice from the District COlITlcil, the
Government, the Coort, or Ihe Independent Monitor at a higher rate. The
District Council must pay such compensation subject to the procedure in

paragrephs 8.b.iv and S.b. v.


IV .

The Independent Monitor will provide monthly sta1emenlS to the DistriCl Council
and the Government setting fonh an accounting of all claimed C(Impensarion and
expenses., including time and activity records or other appropriate supporting
mmcrials. The District Council muS1 pay the Independent Monitor the lotal
amount specified in the monthly statement within twenty days. Fai[ure to timely
pay the amOunt specified in dle Independent Monitor'S monthly statement is a
breach of this Stipulmion and Order by the District Council and may be
punishable as C(Intempt of court.

v.

c.

Within 30 days of the lndependent Monitor's submission of his monthly


statement, the District Council may challenge the amount specified in the
statement, or any expenses detailed in that statement, by filing a written objection
with the Court. Such an objection., however, does not relieve the District
Council of its obligation to pay the monthly statement within the time specified in
paragraph 8 .b.iv . If the District Council is successful in its challenge, it will be
entitled to a. credit in the amount by which the compensation and expenses are
reduced by the Court.

Tenn ofladepeodear Mooitor. The teon of the Independent Monitor win begin on
January 1,2015, and wiU continue for 15 months following thal date.
L

Upon consent ofthe District COWlcil, the Benefit Funds. the Government, and the
Independent Monitor, the Court may extend the term afthe Independent Monitor

t3

Case 14-3506, Document 35, 11/26/2014, 1380999, Page40 of 103

Case 1:90-cv-05722-RMB-RLE Document 1593 Filed 11118114 Page 14 of 22


Case 1:90-<:v-05722-RMB-RLE Document 1588-1 Filed 11114114 Page 14 of 20

for any period. If the Government, the Independent Monitor, IU"Id either the
District Council or the Benefit Funds agree to such an extension. the Court may
extend the tenn afthe Independent Monitor as applicable to the consenting party.
II .

At any time during the Independent Monitor' s term, irthe Govemment, in


consultation with the Independent Monitor, determines that the District Council

is complying wi1h the terms and advancing the objectives of this Stipulation and
Order and the 1994 Consent Decree, that it is continuing to implement necessary

reforms, and that its reforms appear effective and sustainable, the Government
may petition the Court for the Independent Monitor to remain in place but to
exercise more limited authority, or for the Independent Mon.itor's authority over
the District COWlcilio cease, to be reinstated by the Court only upon a petition by
the Government with notice and opportunity to be heard provided to the District
Council.

iii. At any time during the Independent Monitor's term, if the Government, in
consu\tation with the independent M o nitor, determines that the Benefit Funds are
complying with the terms and advancing the objectives of this Stipulation and
Order and the 1994 Consent Decree, that the Benefit Funds are continuing to
implement necessary reforms, and that those refonns appear effective and
sustainable, the Independent Monitor's authority over the Benefit Funds will
cease, to be reinstated by die Court onty upon a petitioo by the Government with
notice and an opportunity to be heard provided to the Benefit Funds.

IV. The decision of the Government whether to petition the Court under paragraphs
S.c.li or 8.c.iii rests entirely in the Government's discretion. and is not subject to
judicial review.
v.

The District Council. the Benefit Funds, or the Government may petition the
Court, on notice 10 the parties 8lId the Independent Monitor, to dismiss the
Independenl Monitor for oommission of an illegal act by the Independent
Monitor or by an employee of the independent Monitor with the Independent
Mooitor's knowledge and apprOval, ror inadequate Or unreasonable performance
of the duties and responsibiliries provided for in thi s Stipulation and Order, or for
any other good cause found by the Court. If the Independent Monitor is
dismissed upon such a petition, or otherwise fails to complete his tenn of office,
the Government, the District Council, and the Benefit Funds must promptly meet
to discuss the appointment of a replacemem lndepeoden( Monitor. In the even(
the parries an:: unable to agree, the Government must promptly submit a list of
replacement candidates to the Court; the District Council must also submit a list
of replacement candidates; the Benefit Fuods will have the opportunity to be
heard on the lists of proposed replacement C8t1didates; and the Court will select
the candidate from the lists submitted 10 the Court who is best qualified to further
the objectives of the Consent Decree and this Stipulation and Order.

9. Indemnification.
a.

The District Council must indemnify out of its own fuods the Independent Monitor and

t4

Case 14-3506, Document 35, 11/26/2014, 1380999, Page41 of 103

Case 190-cv-05722-RMB-RLE Document 1593 Filed 11118114 Page 15 of 22

Case 1:90-cv-05722 ~MB~LE Document 1588-1 Flied 11114114 Page 15 of 20

any persons hired by Of actms on behalf of the Independent Monitor from personal
liability (and any COSts incurred to defend against any clwm of liability) for any of their
actions taken pursuant to this Stipulation and Order. Alternatively, the District
Council may purchase a policy of insurance or bonds in an appropriate amount to
provide the same indemnification. In addition, the Independent Monitor and any
persons designated or hired by the lndependent Monitor to act under this Stipulation
and Order are 10 be entitled to whatever privileges and immunities ITom personal
liability t~a. may exist under the taw for court-appointed officers.
b.

The DistriCi Council must indemnify out of its own funds the Review Officer and any
persons hired by or acting on behaJf of the Review Officer from personal liability (and

any ecru incurred to defend agwnst any claim of liability) for any oftheir actions taken
pursuant to this Stipulation and Order Of the J\llle 20 I 0 Stipulation and Order.
Alternatively, the District Council may purchase a policy of insurance or bonds in an
appropriaJe amount to provide the same indemnification. In addition, the Review
Officer and any persons designated or hired by the Review Officer to act under this
Stipulation and Order or the June 2010 Stipulation and Order are to be entitled to
whate'VCf privileges and immunities from personal liability that may exist under the law
for COW1-appointed officers.
10. JudJci.1 Revielv . Final decisions pursuant to paragraph S.b.iii ofWs Stipulation and
Order, and the lndepeodent Monitor 's certHication of election results pursuant to paragraph
5.j oFthis Stipulation and Order, may be reviewed by the Court upon a petition for review by
the District Council, the Government, the Independent Monitor, or Any aggrieved person.
Any such petition must be filed within 30 days of the decision for which Te'View is sought
In reviewing the decision, the Court will apply the same standard of review of tina1 agency
action under thCi Administrative Procedure Act, 5 U.S.C. 701 el seq. to the decision or
recommendation ofthe Independent Monitor at iss ue. In the absence ofa timely petition for
review, the decision at issue will become finaJ and unreviewable. All other decisions of the
Independen\ Monitor are fUla) and unrevieWable except as expressly provided in this
Stipulation and Order. Nothing in this paragraph or th is Stipulation and Order precludes the
District Council. the Benefit Funds, the Government, or any aggrieved person from
petitioning the Court on the ground that the Independent Monitor has exceeded his authority
under this Stipulation and Order.
MisceUaacoos Provi!~iou

11 .
a.

Coomer "With fbI! Stipulation and Order. To the extent this Stipulation and Order
conflicts with any current or future righlS, privileges or rules applicable to the D;strict
Council or its membership or the Benefit Funds, the District Council, as the
representative of its membership, and the Benefit Funds hereby waive compliance with
any such right. privilege or rule and agree thal they and the DistriC1 Council's
membership will act in accordance with this StipUlation and Order.

b.

Privilege. Neither the District Council nor the Benefrt Funds waives any right they
may have to in... ok.e any applicable privilege or work-product protection prior to
production of an)' information to the Independent Monitor, bu1 must, upon request of
the Independent Moni1or. comply with Fed. R. Civ. P. 26(bX5){A) and this Court 's
15

Case 14-3506, Document 35, 11/26/2014, 1380999, Page42 of 103

Case 1:90-cv -OS722-RMB-RLE Document 1593 Filed 11118114 Page 16 of 22

Case 1:90-cv-05722-RMS-RLE Documem 1588-1 Filed 11114114 Page 16 of 20

Local Civil Rule 262. Production ofinfonnalion to the Independent Monrtor is not to
be deemed a waiver afaoy applicable pri ... ilege or work.-product protcelion, pursuant to
Fed. R. Evid. 502(d). Additionally, the District Council and the Benefit Funds agree
to tbe Independent Monitor's review and use of information provided to him in
furtherance of their common. in'erest in achie.... ing the objectives of this StipUlation and

Order, and accordingly the production ofinforTDation to the Independent Monitor is not
to be deemed a waiver of applicable privilege or work-product protection. Upon a
claim of privilege or work-product protection, whether before or after the Independent
Monitor is given access to information. the Independent Monitor, the District Council,
the Benefit Funds, or the Government may petition the Court 10 determine the
applicability and scope of the privilege or work-product protection.

c.

BlPAA. Disclosure of any information covered by the protections of the Health


Insurance Portability and Accountability Act of 1996 but otherwise required by this
Stipulation and Order is hereby ordered by the Court. pursuant to 45 C.F.R.
164.512(e)(I)(i).

d.

Otber Government Acrioo. Nothing herein precludes the Government, or any of its
departments Of agencies, &om taking any appropriate action in regard to the District
Councilor the Benefit Funds pursuant to the Consent Decree or this StipUlation and
Order, as applicable, or in reliance on any federal laws, including any crim inal
investigation or prosecution, and any action under the federal tax laws,

e.

Retention of Jurisdiction. This Court retains exclusive jurisdiction to supervise


implementation of this Stipulation and Order and retains exclusive jurisdiction to
decide any and all issues arising under this StipUlation and Order, and any and all
disputes growing out of the issuance, interpretation. or application of th is Stipulation
and Order. The Independent Monitor or any party to this Stipulation and Order may
apply to the Court for any orders necessary or appropriate 10 implement the Consent
Decree and this St ipulation and Order, including orders preventing non-parties from
interfering with the implementation of the Consent Decree or this Stipulation and
Order. The Independeot Monitor will have the right to intervene in any matter or
proceeding concerning this StipUlation and Order,

f.

StatllS of Consent Decree aad Otlier Orden. The entry of this Stipulation and
Order does not supersede or affect the Consent Decree or the rights and obligations of
the parties under the Consent Decree aT subsequent orders of the Caul1 . Except as
specified herein, the entry of this Stipulation and Order does not supersede or affect. any

other Order that the CouI1 has entered in this case.

g.

All Writll Ad. The Government or the Independent Monitor may apply to this Court
at any time pursuant to the All Writs Act, 28 U.S.C. \651(a), for relief as against
non-parties to the COnsent Decree or this Stipulation and Order. including employers of
members of the District Council, and any ather non-party who may be in a position to
interfere with the implementation of the Consent Decree or Ibis Stipulation and Order.
Upon such applicatiOn, the Court may grant such relief as may be necessary or
appropriate to prev ent the frustration of the Consent Decree and this St ipUlation 8Ild
Order. The Government or the Independent Monitor may apply to the Court for the
16

Case 14-3506, Document 35, 11/26/2014, 1380999, Page43 of 103

Case 1:90-cv-05722-RMB-RlE Document 1593 Filed 11118/14 Page 17 of 22


Cue

!)Oz.

g.f'5799.RMfPR1 E .oQeument 1588 1 riled 11114/14 Raga 17 gf 20

iuamcc of robpocza&a DCC(, )' to obtaia lIDy InfumucjoD. docoO'M!l!tl:, or IBIrtimuny

Idl:\'lDlltollll<hmlljJpticolion.
h.

Attont.oy'.

,'* ad CNta.

Tbr: entry of this Stipulation IIDd Order' iJ witham

1IItomoy', fees ... co... to my party.

Notka. Any nodoc, excepI-' to tbe C<>Urt, reqillnod by tbio Stipulation ODd
0rtIer may be provided by eIcc:trooic maiL

j.

C.uterpart SIp........ Thio Stipolatioo may be ",,,,,,,JIEd in _ or ""'"'


co"",",po11>I, CIICh ofwhicb isro be ...... od m oozinal. buI on ofwhlcb to~
constitute tbe same imtro:rnI!nt.

CONsmmm AND AOREED TO:

Now yen. Now YOlk


No....ber 14, 2014

PREI!T BIIARARA

Uni1<d _
AItDmoy for !be:

Southcm District of New YOlk

~-

By:

TARA M. La MORTE

Ao_ Unitod _
Atto""'l"

86 Cbambc:n_

N.... Ymk, Now YOlk 10007

T~:212JU72703,~746

Fax: 212.6372702
E-mail: baVamin.tmnnce@IWoj-iOv
!IULlamDrto2@u!doj.gov
N... yen. N"", YodI:
Na....ber .N.2014

WCKERMAN SPAEDER u.P


AttomI1y flrlJefrndont
DiI!ricI Couac!l ofNew Yark City and
VIcinity of !be: Ullit>d Brotberhood of
0Dd Iolnon of America

By.

BARBARA:~
~ .

. .

IllS Aveoue oftheAmcri_ 31st 600r


New yen. Now Yom 10036-2603
Telephone: 646.746.8838
Por. 212_704.4256
E-mail: bj~com

17

Case 14-3506, Document 35, 11/26/2014, 1380999, Page44 of 103

Case 190-cv-05722-RMB-RLE Document 1593 Filed 11118/14

Page 180122

Case 1:90-cv-05722-RMB-RLE Document 1588-1 Filed 11114114 Page 18 of 20

Ilo!cd:

New York. New York

D1S1R1CT COllNCR. OF NEW YORK


CfIY AND VICINTI'Y 01' TIlE UNTl1ID
BROTIlERHOOD OF CARPENI'BRS
AND JOINERS OF AMl!RICA

Novanborf':L2014

By:

Dolod:

N.., York, NcwYorl<


November l.'L 2014

Secrotary-T_ _

KAUFF MCGUIRE It. MAIlGOLIS UP


Albney for Benefit FW><b
By:

ODd:

_her

RAMONO MCGUIRE
950 Third Avenue. 14th DOO1
Now Yorl<, Now York 10022-2705
Telephone: 212.909.0111

PIX: 212.694.1936

E-mail: m"iU"'@kmm.oom

N.... York, New Yort


f':L 2014

BENEffiFUNDS
By:

JO~~~

Benefit

ds Union Trustee

By:

DAV1D MEBI'.RG. co:chBiiDUIii


BCZlefir Funds Employer TrusIeO

18

Case 14-3506, Document 35, 11/26/2014, 1380999, Page45 of 103

Case 1:90-cv-OS722-RMB-RLE Document 1593 Filed 11118114 Page 19 of 22

Case 1:90-cv-05722-RMB-RLE Document 1588-1 Filed 11114114 Page 19 of 20

Dated:

DISTRICT COUNCIL OF NEW YORK


CITY AND VICINITY OF THE UNITED

New York, New York


October ~ 2014

BROTIffiRHOOD OF CARPENTERS
AND JOINERS OF AMERICA

By:

fosEPH GmO!lR
Executive Socn:tary~ Treasurer
KAUPP MCGurnB & MARGOLlS LLP
Atrom6Y for Benefit r~

New Yolk, New Yoric


- . Ji, 2014

jJO...... f,A-( .

By:
RA

la~--f1- ~~. "1


0 DMC

950 Third Avenue. 14th flOO;


New York, New York 100222705
Tolephooo: 212.909.0711
F",,: 212.694.1936
E-mail: megWre@kmm com

Dosed:

BENEFIT FUNDS

New York, New Yade


GoIoIoeI:.JL,2014

~&""-Vr

JOSEPH GEIGER. Co-Choino.n


B..,fil FUDds U1il'~ 1~'t

By:

IS

Case 14-3506, Document 35, 11/26/2014, 1380999, Page46 of 103

Case 1:90-cv-OS722-RMB-RLE Docum ent 1593 Filed 11118114 Page 20 of 22

Case 1:90-cv-05722RMBRLE Document 1591 Filed 11117/14 Page 1 of 3

11f15A'/ENUf Of 1)1 AMEII.ICAS

ZUCKERMAN SPAI!DER

UI'

212 104.9fOO

31 51 flOOR

Nf'Wl'DRllNY umS2603
2121C'. 256 h,. www.llic~~fI.II a~ com

8AReAAA S. JONES
P~rtner

{211j8S73oI37
lIjooesGlI.ItU' IM~.cot.\

November 17,2014

VIA PM'll DELIVERV AND ECF


Hon . R..ichard M. Berman
United States District Court for the Southern District of New York
Daniel Patrick Moynihan United States Courthouse
500 Pearl Street
New York, NY 10007
Re:

United States v. Districl Council, No. 9O-cv5 722

Dear Judge Berman:


The District Counci~ the Benefit Funds. and the government write in response to Your
Honor's Administrative Order of November 14, 20]4. Under the proposed modifications to
paragraph S.b.iii, there are fOUT potential outcomes: (I) the lndependent Monitor (<lIM'') makes a
determinaIion, which the Executive Committee affirms, and then the aggrieved person does not
seek: review and Lhe determination of the rM stands; (2) the 1M makes a determinatio n, which the
Executive Committee reverses, and then the 1M, convinced by the reasoning of the Ex:utive
Committee, does not seek review and the determ ination of the Executive Committee stands; (3)
the 1M makes a delermination, which the Executive Committee affirms, and then the aggrieved
person petitions the DistriCl Court for review; and (4) the rM makes a determination, which the
Executive Committee reverses, and then the 1M petitions the District Court for review. Below,
we present a hypothetical that results in either of these last twO outromes. 1
Based upon the submission of the Review Officer of October 6. 2014, the bulk of the
vetoes under paragraph S.b,iii of the June 3, 2010 Stipulation and Order were of individuals from
office Or employment, so we use such an example 10 underpin the hypothetical here .

In our hypothetical , the 1M receives a tip that an employee of the District Council was
affiliating with a barred person uoderthe terms of the Consent Decree. The 1M then conducts an
investigaLion and gathers evidence th8t suggests that the Council employee was in contact with a
barred person and concludes that the employee should be dismissed. Upon making this
detennination, the 1M provides both Lhe District Council and the employee with notice and an
I The firn two potential outcomes are not appcaled to Your Honor and the .standard applied by the: Exec:ulivoe

Committee is !he same as !hat applied in the other two, so to avoid repetitlon, we do not illustrate those two

outcoroes in this submission.

WASMIJ./GJON. OC

Nf'W YOl\K

JAMI'A

SAUIMOR

Case 14-3506, Document 35, 11/26/2014, 1380999, Page47 of 103

Case 1:90-cv-05722-RMB-RLE Document 1593 Filed 11118/14 Page 21 of 22

Case 1:90-cv-05722-RMB-RLE Document 1591 Filed 11J17/14 Page 2 of 3

ZUCKERMAN SPADER ""

Hon. Richard M. Bennan


November 17,2014

Page 2
opportunity to be heard. Within the allotted five days., the District Council and the employee
provide replies to the [M, who then determioe:s that a reasonable basis for continued employment
was not established. The 1M neKt presents his evidence of the employee's contact with the
barred person to the Executive Committee and recommends that the individual be dismissed

from employment at the District Council.


In this and every case, the Executive Committee reviews the detennination of the 1M for
substantial evideoce. ItI doing so, the Executive Committee does not make a de novo
detennination based upon the underlying facts, bUI instead considers whether there is substantial
evidence, that is., "such relevant evidence as a reasonable mind might accept as adequate to
support [the (M's] conclusion." Consolidated Edison Co. Y. NLRB, 305 U.S. 197,229 (193&).
Since there is no pelition for review made in the: ftrst two potential outcomes presented m
the first paragraph, we now discuss how the procedure works in outcomes (3) and (4). In the
third outcome considered in the flrst paragraph. the Executive Committee determines that there
was substantial evidence to support the 1M's determination that the employee was in contact with
a barred person and that be should be dismissed. Following tflis affirmance by the ExecU1ive
Comminee, the dismissed employee then petitions Your Honor for review. In conducting this
review, Your Honor reviews the determination of the [M under the standards of 5 U.S.c.
706(2). including, among other things, whether it is "arbitrary, capricious, an abuse of
discretion, or otherwise oat in accordance with law" or "unsupported by substantial evidence."
In this way. Your Honor's review is analogous to the procedure followed by the Court of
Appeals in reviewing districi court decisions reviewing finaJ agency action. In such cases, the
Court of Appeals "give[s] no deference to the lower court but review[s] de novo whether the
agency action satisfies the standards of the APA. In other words, like the district court. lthe
Court of Appeals] re\liew(s] the record to detennine whether the agency considered the relevant
factors and acted within its discretlon ." Unired Slales v. Inr'J 8hd ojTeamslers, 170 F3d 136,
142 (2d Cir. 1999) (internal quotation marks and alterations omined). So too here, Your Honor
does not defer to the Executive Committee deaenninalion, but would "review the record to
determine whether the [IMJ conSidered the relevant factors and acted within [his] discretion." Id
If Your Honor concludes that the detennination of the 1M was not arbitrary Or capricious or
otherwise met the standards oftfle APA, you would affirm that determination.

In the fourth outcome, the Executive Committee instead determines that there was DOl
substantial evidence to support the conclusion of the IM that the employee was in contact with a
barred person and, thus, tbat individual would DOl be fired. Following this reversaJ , the 1M then
petitions Your Honor fOT review. in conducting this review, Your Honor applies the same
standard of review as you would apply in the scenario whe:re the Executive Committee atfitmed
the 1M and the employee sought review. Here, you would give uno deference" to the Executive:

Case 14-3506, Document 35, 11/26/2014, 1380999, Page48 of 103


h

as

Case 1:90-cv-05722-RMB-RLE Document 1593 Filed 11118/14 Page 22 of 22

Case 1:9D-cv-05722-RMB-RLE Document 1591 Rled 11117/14 Page 3 of 3

,..4

ZVCKftMAN SPAEDat

W'

Hon. Richard M. Berman


November 17, 2014

Page 3
Comminee detenninatioll and instead consider anew whether the determination of the IM rna
t),e standards of5 U.S.C. 706(2). Int'18M o/Teams,,,,, 170 F.ld at 142.
Respectfully submitted,
lsi

Barbara S. Jones

ce:
Raymond McGuire

Benjamin H. Torrance

Tara M. LaMorte
James M. Murpny
OeMi, M. Walsh
Bridget M. Rohde

Case 14-3506, Document 35, 11/26/2014, 1380999, Page49 of 103

Att. D

Case 14-3506, Document 35, 11/26/2014, 1380999, Page50 of 103

UNITED STATES DISTRICT COURT


SOUTHERN DISTRI CT OF NEW YORK

---------- --------------------------x
UNITED STATES OF A.;\1ERlCA,

Plaintiff,
90 Civ. 5722 (RMB)

-against-

DISTRICT COUNCIL OF NEW YORK CITY


AND VICINITY OF THE UNITED
BROTHERHOOD OF CARPENTERS MolD
JOINERS OF A.;\1ERlCA, et ill.,

Defendants.

------___.....___..._.____.________________x
. I
IIolEMORANDUM OF THE REVIEW OFFICER IN RESPONSE

TO THE COURT' S ORDER TO SHOW CAUSE

REGARDING THE APPLICATION OF JOHN HOLT

Bridge, M. Rohde
Anomey for the Review Officer
Dennis M. Walsh, Esq .
Mint z. Levin, Cohn, Fern s, GJovsky
666 Third Avenue
New York, NY 10017

Case 14-3506, Document 35, 11/26/2014, 1380999, Page51 of 103

PRELIMINARY STATEMENT

The Review Officer (URO") submits this memorandum in response to the Court's Order
10 Show Cause, which was enlered hased on the application of John Holt to have the Coun sel
aside the RO's veto of Mr. Holt's employmen1 as a business representative of the New York
District Council of Carpenters. The veto was a proper exercise of the RO's authority under
Paragraph 5.b.iii of the StipUlation and Order entered in United Stales v. District Council of
Carpenters. 90 Civ. 5722 (RMB) on June 3, 2010, and, for the reasons stated herein, and in the

accompanying Declaration of Dennis M. Walsh, the veto should be upheld.


THE STIPULATION AND ORDER
A.

Relevant Powers Pursuant to the Stipulation and Order

By paragraph 3 of the Stipulation and Order, Dennis M. Walsh, Esq. , was appointed
Review Officer of the New York City District Council of Carpenters C'Disoic1 Council") and its
Benefit Funds. Following recent events in the District Council's long Iroubled history, as agreed
to by the Government, the District Council and the Benefit Funds and acknowledged by the

Court. ''the presence and activity of an independent court-appoinled officer granted powers"
beyond those provided in previous orders in this matter is "essential to the eradication of

corruption and racketeering as they affect union carpenters and union employees". Stipulation

and Order at p. 3.
Among the powers afforded to the RO are Review and Oversight Authority, including the
authority "to review !.he persons currently holding office or employment." Id. at

5.b.i(J).

Upon such review, the RO may detennine, infer alia, that a maner violates a law or COUl1 order
in this case, id. at 1 5.b.iii(c); is contrary to a fiduciary responsibility imposed by 29 U.S.C. 501
or 29 U.S.C. 1001 el seq. (ERISA), id. at

"J S.h.iii(d); or is inconsistent

with the objectives of

me Stipulalion and Order, id. al 15.b.iii(e). If the RO makes sucb a delennination, he "may veto

Case 14-3506, Document 35, 11/26/2014, 1380999, Page52 of 103

or require the District Council to resc ind its action, proposed action or lack of action ." Jd . al

S.b.i ii.
8.

RO' s Procedures for Action P'l.rrsuant to Paragraph S.b of the Stipulation and
Order

The Stipulati on and Order does not provide any procedures that the RO is required to
employ in exercising his Review and Oversight Authority; it states that the RO may prescribe
procedures. See. id . a t 4J S.b. On June 2 1,20 10, the RO promulgated the procedures that he
would foll ow ''when determlning whether to take certain action pursuant to ~ S.b.iii of the
Stipulation and Order," including in the veto context.

As the RO noted in the Preliminary

Statement of his Proced ures memorandwn, the procedures were not required by the Stipwation
and Orde r but were being established to facilitate an efficient means for the RO to make or
supplement a record and all ow one to make a written submission to the RO . See Declaration of

Dennis M. Walsh, Exhibit 5 thereto (Attachment A).


As set forth in the Procedwes promulgated by the RO, if be is co ntemplaring a veto under
~

S.h.iii, he wi ll send a \.Vl"inen Notice of Possible Action to affected parties no later than 10 days

prior to issuing the veto. The RO provided that b.is Notice of Possib le Action wou ld include a
"concise statement of the maner under consideration," reference to which of the conditions in ~
5.b.iii(a)-(e) might apply and an invitation for the parties given notice to make a written
submission by a specified rime stating facts. law or arguments a party believes relevant . The
Procedures also provide that the RO, at his discretion, may invite the parties 10 appear at a PreAction Confere nce. Once Lhe rime for a wrinen submission and/or conference has passed, the
RO will take action pwsuam to

f: 5.b.iii or not and, ifhe is taking actio n, send a written decision

to the relevant parties. See id.

Case 14-3506, Document 35, 11/26/2014, 1380999, Page53 of 103

THE STANDARD OF REVIEW GOVERNING THE COURT


WITH RESPECT TO THE RO', ~ S.h.ill VETOES
The Stipulation and Order provides that the RO's actions with respect to IIJ S.b, which
includes the power to veto employment, "may be reviewed by the Court upon a petition for

review by the District Counci l, the Government, or any aggrieved person." Stipulation and
Order at

11 .

The Stipulation and Order further provides thaI "in reviewing the Review

Officer's decision the Court will apply the same SLandard of review applicable to review of fina l

agency action under the Administrative Procedure Act, 5 U.S.c. 701 et seq." In an earlier
decision in thi s matter interpreting the comparable provision of the Consent Decree, the Court
(Haight, 1.) held that under JOCe) of the APA . 5 U.S.C 706, "a reviewing court determines de

novo 'aU relevant questions of law. '" United States v. District Council. et al. ("Fimino"), 941 F.
Supp. 349, 361 (S.O.N. Y. 1996) (citing cases). "In considering a relevant question of law under
the APA, the reviewing court asks whether the agency's action was ' arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law.'" rd. at 362 (ciring 5 U.S.c. 706

(2)(A)). An agency's finding of facts "are enritJed to affirmance" by the reviewing court "if they

are reasonable and supported by substantiaJ evidence in the record as a whole." ld . (citalion
omined). The APA allows agency findin gs to be vacated "only if they are 'unsupported by
substantial evidence"'. Id. (citation omitted). Substantial evidence is more than a mere scintilla.
but something Jess than the weight of the evidence, and the substantial evidence standard may be
met despite the possibility of drawing two inconsistent conclusions frorn the evidence.

Id .

(citations omined).
PROCEDUREAL HISTORY AND FACTS
On August 6, 2010, the RO issued a Notice of Possible Action to John Holt of Local
Union 926, indicating that based on

5.h.iii of the Stipulation and Order he was "considering

Case 14-3506, Document 35, 11/26/2014, 1380999, Page54 of 103

issuing a veto of the employment of JOM Holt wilh the New York District Council of
Carpenters." See Attachment A, Exh ibit 6 therelo.
Consistent with his Procedures, the RO then set forth the following facts together v.ith
citation to the sections under which he was contemplating acting:

The facts and circumstances under review involve suspected violations of


the Consent Decree and the Stipulation and Order entered in this matter; to wit,
(1) beginning on or aboul September 21, 2009, Mr. Holl knowingly violated the
Job Referral Rules by dispatching a member of a constituent local union to a job
in the jurisdiction of lhe District Council; (2) on or about September 22 , 2009, and
at times thereafter including on or about October 16,2009, Mr. Holt engaged in
acts intended to obstruct lawful investigation of his violation of the Job Referral
Rules; and (3) on September 22 and October 16, 2009, Mr. Holt s ave false
answers to questions posed by the Independent Investigator regarding the
aforementioned material matters occurring on and between said dates . Such
conduct would present grounds for a veto pursuant to Paragraph 5.b.iii (c, d and
e).

Id .

As also provided by his Procedures , the RO invited Mr. Holt by to make a wrineo

submission by noon on August 19,2010. See id.


Angel o R. Bisceglie, Jr. of Bisceglie & DeMarco, LLC represents Mr. Holt . On August
27,2 010. at Mr. Bisceglie 's request, the RO and Messrs. Bisceglie and Holt had a conference al
wh.ich statements were made and argwnents were presented on Mr. Holt 's behalf.

Messrs.

Bisceglie and Holt had chosen not to make a wrinen submission. See Attachment A at p. 8; see
also Attachment B.
On September 3, 2010, the RO issued a Notice of Veto ofMr. Holt 's employment. The
RO exercised hi s judgment 10 issue a veto having cons idered the Declaration of William J.

O'Flaherty. a staff investigator for the RO, dated September 3, 2010, the report of Ihe
Independent Investigator ("U.") William P. Callahan , dated November 23, 2009. and the
statements and arguments made by Messrs. Holt and BiscegJie during the August 27, 20 I 0
conference. See id.

Case 14-3506, Document 35, 11/26/2014, 1380999, Page55 of 103

In his report, Ll. Callahan summarized the interviews of numerous witnesses and set forth
pertinent infonnation from telephone records supporting his recommendation that action be
taken against Mr. Ha ll "for violating lhe job referraJ rules in sending Richard Huggins to a
worksite for employment instead of the proper procedure of notifying the [Out of Work Li st]
the next union member to be dispatched to the jobsite." See 1.1. Callahan Report at

fOT

15 anached

to Anadunent A, Exhibit 4. Regarding the interviews. stripped back to the essenriaJ facts. Mr.

Holt denied a number of times that he had sent Mr. Huggins to the jobsile, see, U ., id. at ~ 5, yet
Mr. Huggins admitted it to the Shop Steward ("S/S") Greg Calabrese when he arrived at the
jobsite according to SIS Calabrese.
id. at

id . at

4 ., and

10

union member Frederick Wycl iffe, see

9. SIS Calbrese and others interviewed related that Mr. Holt later came to the job site and

acted aggressively toward SIS Calabrese. See id . at

~s

4, 9, 10 and Ii. Moreover, the telephone

records corroborated that Mr. Holt had sent Mr. Huggins to the j ob s ite (essentially, SIS
CaJabrese's account of what happened) . See id. at

14.

As l.l. Callahan additionally summarized, "BI A Holt may have removed a shop steward
from rus employment improperl y and fabricated union charges against said SIS , along with

requesti ng a shop steward review to cover up the detection ofrus improper actions. Further, it is
the opinion of the LI. that B/A Holt lied to and intentionally misled members of the 1.1. Office
and [the District Council] Anri-CorrupLion Committee during interviews with said investigators."
See id. at

15 .

In hi s declaration, 1vlr. O'Flaherty, who was an investigator for the I.L 's Office before
working on thi s investigalion for the RO, summarizes pertinent facts from the conference he
attended with the RO and Messrs. Holt and Bisceglie on August 27, 2010. Most notably, Mr.
O'Flaherty relates that Mr. Holt again denied that he sent Mr . Huggins and thai be was the

Case 14-3506, Document 35, 11/26/2014, 1380999, Page56 of 103

aggressor with respect to SIS Calabrese, which is in contradiction to witnesses that Mr.
O'Flaherty interviewed. See Anachment A, Exhibit 4 at

~s

4 and S. Mr. Holt explained that he

would not have sent Mr . Huggins to a dry wall job because Mr. Huggins doe s not have those
skills. This is contradicted by District Council records.

See id. al

notes that "(tJelephone records confirm that the SIS called Holt.

4. Mr. O'Flaherty also

Holt 's telephone records

showed he then caHed Huggins right after receiving the SIS call." See id. at 'i 6. Mr. Holt asserts
that a series of telephone calls are a coincidence. See id ,
Based on the above, the RO issued the veto nolice finding reasonable cause

10

believe

that (I) "begi nning on Or about September 21, 2009, Mr. Holl knowingly violated the Job
Referral Rules by dispatching a member of a constituent local union 10 a job in the jurisd iction of
the District Council ; (2) on or aboul September 22. 2009, and at times thereafter, including on or
about October 16, 2009, Mr. Holt engaged in acts inlended 10 obstrucllawful investigation of his
violation of the Job Referral Rules; and (3) on September 22 and October 16, 2009, Mr. Holt
gave false answers to questions posed by the office of the [ndependent Investigator regarding
material aspects of the aforementioned matters occurring on and between sai d dates, and
continued to make materially false statem ents in the conference with the Review Officer held on
August 27. 2010." See Attachment B.

ARGUMENT
A.

Issuing the Veto Notice With Respect to John Holt's Employment Was Clearly
Within The Authority Granted To The RO By The Stipulation and Order

Mr. Holt first argues that the RO did nol have the jurisdiction to issue the Veto Notice .
His assertion is that an agency " is circumscribed by the authority expressly granted to it," Holl
Memorandum of Law at p. 4, and, specifically, that there is some sort of time limitation that
prevents the RO from "go[ing] back in lime and inveSTigat[ing] maners which had occurred

Case 14-3506, Document 35, 11/26/2014, 1380999, Page57 of 103

indeed., which had been resolved - prior to the date of his appointment as Review Officer." Id. at

pp.45.
As a generaJ maner, the RO has been granted broad power to eradicate conuption, see

Stipulalion and Order at p. 3, and he has been specifically authorized to review persons currently
holding office Or employment and to issue a veto if a person's conduct violates the Stipulation
and Order in any of a number of ways, including if it is inconsistent with the objectives of the
Stipulation and Order,

Stipulation and Order at

~s

S.h.i(3) and S.b.iii. The issuance of a

Veto Notice with respect to Mr. Holt was squarely ...vithin the purpose of the Sti pulation and
Order and the scope of the RO 's authority thereunder.
Moreover, the Stipulation and Order provides no time limitation whatsoever regarding
the RO's exercise of his Review and Oversight Authority. Specifically, the Stipulation and
Order stales in per1inenl part that [t]he Review Officer is granted review and oversight authority
with respect to the following maners ...The Review Officer is granted the authority to review the

persons currently holding office or employment, and must be given prior notice of, and is
granted the authoril}' to review, aU proposed appointments to office or employmenl.. .. " Jd . at

S.b.i(3). Neither this paragraph of the Stipulation and Order nor any other provides a statute of
limitations constricting the scope of conduct that the RO can review.
The language of the Stipulation and Order plainly means to provide the RO with Review
and Oversight Authority over current officers and employees as well prospective officers and
empl oyees. It was the clearly stated objective of the parties to the Stipulation and Order that the
RO have broad powers designed to eradicate corrupti on at the District Council and Benefit Funds
once and for all: "the presence and activity of an independent court-appointed officer granted
powers beyond those provided to the Independent Investigator in the December 2002 Stipulation

Case 14-3506, Document 35, 11/26/2014, 1380999, Page58 of 103

and Order and the August 2005 Order, as set forth below, are essential to the eradicat io n of
corruption and racketeering as they affect union carpenters and union employers ... " See id. at p.
3. Additionally, as the RO notes in his declaration, "[i]n approving the Stipulation and Order,
Judge Haight found thaI 'it is entirely clear that increased efforts must be made to cleanse the
District Council and its constituent locals of co rrupt and di shonest practices." See Attachment A
at p. 3. Any argument that the RO cannot review cum: nt officers or employees would be in stark
conlTadiction to both the express language and the purpose of the Stipulation and Order. See id .
at 4.
This, in turn, would be entirely inconsistent with basic principles of contract
interpretation.

See,~,

Travelers Casualty and Surety Co. v. Dormitory Authority-State of New

York, 20 10 WL 34191 96, at *5 (S,D .N.Y. 20 10) ("Under New York law, '(i]t is well ,e"led Ihat
a conttact is to be construed in accordance wi th the parties' intenl, which is general ly discerned

from the four comers of the docwnent itself' (citation omined). '[A) written agreem ent that is
complete , clear and unambiguous On its face must be en forced according to the plain meaning of
its lenns.' (cita tion omitted)." See aJ so Bison Capital v. ATP Oil & Gas Corn., 20 10 Wl
2697l 21, al ' 9 (S. D,N ,Y. 20l0) (clear contractual language does not become ambi guous by
virtue of the interpretation given by a party to litigation).
II is important to note that Mr. Ho lt weaves in a number of arti ficial distinctions in
making his argument. First, the fact that the RO was recently appointed on June 3, 2010 is
irrelevant. The relevant date wou ld be the one when the Consent Decree was issued on March 4,
1994. The Consent Decree is the initi al and overarching agreement entered during the {rial of the
District Council 0 0 civil racketeering charges alleging, inter alia , that the Di strict Council and its
conslitue nt locals were infected by organized crime. See U.S. v. District Counci l ("Fiorino"),

Case 14-3506, Document 35, 11/26/2014, 1380999, Page59 of 103

941 F . Supp. at 355. Various officers have been in place throughout the history of the Consent
Decree to help emdicate corruption, with the RO being the most recent appointment with the
broadest powers . Jt would be utterly inconsistent witn the purpose of tne Consent Decree and of
the Stipu lation and Order 10 superimpose a term limiti ng the RO to reviewi ng currenl employees
only going forward.

1'I1r. Holt also implies a distinction between the time frame with respect to which the RO
can review persons ho lding o ffi ce or e mploy ment and the time frame in wh ich he can i.nvestigate
criminal matters . This disti nction too is un supported by either the purpose behind or the plain
language of the relevant documents . The law is plain that th is contract like any other must be
construed based on its express language and the in tent of the parties.
Finally in connection with his first point, Mr. Holt asserts that Judge Haight was
conce rned about the RO's authority based on a remark by Judge Hai ght thai he was ''wTapping
Mr. Wal sh 'i n the robe of an ayatollah.'"

First, thi s remark was made in connection with Mr.

Walsh 's power in connection with the holding of union elections, not in connection with
reviewi ng individual officers and employees. ThaI said, there is no disagreement thaI Mr. WaJsh
has been given broad authority. That was done by design and agreement of the parties because
of the intractable corrupti on at the District Counc il and, again, it would be inconsistent with the
purpose and plain language of the relevant documents to art ifi cially impose a time limit on the
RO's review.
B.

Under the Applicable Standard of Review, the RO's Veto Notice Should Be
Upheld

Mr. Ha il nex t argues that the RO's veto should not be upheld under the APA , claim ing
that the RO acted arbitrarily and capriciously and did not consider all rel evant facts, and adding

Case 14-3506, Document 35, 11/26/2014, 1380999, Page60 of 103

an unsupported allegation of bad faith. See Holt Memorandum of Law at pp. 5-7. His argument
does not withstand scrutiny.

As set forth supra,

In

considering a relevant question of law under the APA, Ihe

reviewing coun asks whether a decision was "arbitrary. capricious, an abuse of discretion or
otherwise not in accordance with law."

Fiorino. 941 F. Supp. at 362.

Whether there were

sufficieot facts 10 support a decision turnS on the substantial evidence ruJe. (d.
The essence of Mr. Holt's argument appears to be that the RO did not consider all
relevant facts. Holt Memorandum of Law at p. 6. The RO must detemtine only that there is
substan tial evi dence of such a v iolation having occurred. Such a delenninarion is left 10 hi s
sound discretion.

He perfonns a specialized and enumerated oversight role pursuant to the

Stipulation and Order and his determinations are entitled to great deference by the Court. See,
e.g., Uniled Stales v. lnl'l Brotherhood ofTeamSlers. 905 F.2d 610, 616 (2d Cir. I 990). The RO
is entitled to "some latitude in basing decisions upon his own perceptions, conclusions, and
assertions regarding the information he has received." United Slales v. District Council. 880 F
Supp. 1051 , 1068 (S.D.N.Y. 1995).

Substantial evidence, though mare than a mere scintilla, is less than the weight of the
evidence, and the substantial evidence standard may be met despite the possibility of drawing
two inconsistent conclusions from the evidence. FiorinQ, 941 F. Supp. al 362. The RO is nol, as
a prosecutor would be, requjred to demonstrate pToofbeyond a reasonabl e doubt or even satisfy a
clear and convincing evidence standard .
Based upon the evidence presented to 'he RO in Mr. O'Flaherty's declara lion, 1.1.

Callahan's report attached thereto, his participation in a conference with Messrs. Holt and
Biscegiie, and his considerable experience as a prosecutor and staff for one of his predecessors in

10

Case 14-3506, Document 35, 11/26/2014, 1380999, Page61 of 103

this maner, Investigations and Review Officer Kenneth Conboy, see Attachment A at pp. 23. it
was clearly wiihin the RO's discretion to fmd reasonable cause 10 believe thai (I) " beginning on
or about Seplember 21 , 2009, Mr. Holl knowingly violated the Job Referral RuJes by dispatching
a member of a constituenl local union to a job in the jurisdiction of the District Council; (2) on or
about September 22, 2009, and 81 limes thereafter, including on or about October 16, 2009, Mr.
Holl engaged in acts intended to ObSIrUCI lawful

inv~tigalion

of his violation o f the Job Referral

Rules; and (3) on September 22 and October 16. 2009. Mr. Holt gave fal se answers to quest ions
posed by the office of the Independent Investigator regarding material aspects of the
aforementioned maners occurring on and between said dales, and continued to make materially
[aJse statements in the conference with the Review Officer held on August 27, 2010." See
Attachment B.
The RO reviewed the relevant evidence, including swnmaries of "Witness statements at the
time to the 1.1.'s office and telephone records contained within the O'Flaherty Declaration and
the 1.1. CaJlahan ' s report.

This evidence plainly supports the conclusion that Mr. Holt's denials

of sending Mr. Huggi ns to the jobsite in violation of Job Referral Rules as well as of being the
aggressor toward SIS Calabrese were contradicted by others with firs1 hand knowledge at the job
site , Mr. Huggins' initial statements to others at the jobsite and records showing phone calls
between relevant partiCipants at the time witnesses said events unfolded. The RO's finding that
Mr. Holt attempted to obstruct I.I. Callahan' s investigation and did so by lying to investigators

logically follows.
Tn consideration of all the infonnation he received, including the admini strative response
of the USC supervisor to 1.1. Callahan's report,

Attachment A at p. 6 n.3, the RO found that

Mr. Hall had violated the Job Referral Rules and committed the related. transgressions and that

11

Case 14-3506, Document 35, 11/26/2014, 1380999, Page62 of 103

the proper exercise of h.i s Review and Oversight Authority was to veto Mr. Ho lt 's employment.

This decision is consisten t with the ample facts and the logical inferences from those
facts and is not a product of bad faith. We note that there is no clear statement let alone factual
suppon for how the RO supposedly acted in bad faith. See.

u., James

Madison Limited v.

Ludwig, 82 F.Jd 1085, 1095 (D.C. Cif. 1996). It is not consi stent with bad faith on the part of
the RO bUl rather quite the opposite. It is an instance of the RO exercising his independent duty

under

5. b of the Stipulation and Order to review persons currentl y hold ing office or

employment with the Di strict Councilor its constituent locals as part of hi s broad mandate to
eradicate corruption and racketeering as they affect union carpenters and union employees. See
Sti puJation and Order at p. 3; see also Attachment A at p. 4. Thai the UBC [ruSlee exerc ised his
managerial discretion

10

brie ny suspend Mr. Holt in no way bars action by the RD. Certainl y,

the Stipulation and Order does not so provide and it would be inappropriate to so construe this
contract for the reasons stated supra . Fundamentall y, the responsibilities of the RO and the USC
rruslec are separate and distinct. The veto was ent irely appropriate and consistent with the effort
to cleanse the District Council , to borrow Judge Haight' s phrase.
Mr. Holt's argument re garding the UB C trustee 's enactment of a "zero tolerance" pol icy
effectiv ely legitimizes prior vi olations of the Job Referral Rules. This would be unerl y at odds
with the purpose of the Stipulatio n and Order.
The RO acted within his authority to review Mr. Holt's employment and the ev idence
supponed a veto of his employment by the RD. The RO's dec ision sho uld stand .

"

II

We note thai Mr. Holt's submission includes affidavits by him and by Richard Huggins . Under the
governing saandard o f review, 8 coun does nOI engage in faci finding and sobslirule its resolulion of the (acts for thaI
of the agency. h y . , James Madison Lim ited "V . Ludwig, 82 FJd at 1096. In any even t, the case remains lh al the
facts meet the substantial evidence standard and the veto decision was nat arbitTary or capriCiOUS.

J2

Case 14-3506, Document 35, 11/26/2014, 1380999, Page63 of 103


b

C.

The Claim ilia! Mr. Holt was Denied Due Process Is Utterl y Without Merit

Mr. Holt claims thaI the RO failed to provide him due process o( law in thal, for exam ple ,
there was no hearing at which witnesses appeared, the RO relied on hearsay and no discovery
was provided by the RO .

See Holt Memorandum of lawaI 7-10 .

Mr. Holt argues that

regardl ess of whether the RO is a state actor. the Stipulation and Order itself requires some
"rudimentary" due process. See Holt Memorandum of Law at 7. In fact, even though the RO is
not a state actor, all affected parties are provided with due process.

Since the RO is not a state actor, which Mr. Holt implicitly recognizes, as he must , under
United States v, tnt ' l Brotherhood of Team sters, 941 F.2d 1292 (2d e ir. 1991), there was no
constitutional right of due process.

Add ilionaJl y. by jts express terms, the Stipulation and Order does not impose proced ures
for the RO 10 foU ow in exercising his Revie w and Oversight Authority. The StipuJa1ion and
Order states that the RO may prescribe procedures.

See Stipulation and Order at

S.b. As

ind icated supra, the RO in fact promu.lga1ed procedures that he would follow "when determining
whether to take certain action pursuant to ~ S,b.iii afthe Stipulation and Order," including in the
veto context, in order to facilitate an efficient means for the RO to make or supplement a record
and allow one to make a written submission Or orally conference with the RO. See Attachment
A, Exhibit 5. These procedures include notice of possible action to the individual invo lved and
time for that individual to make a response and thus be heard. The RO foll owed the procedures
10 Lhe

letter here.
Mr. Holl claims that !.here are certain due process requirements in lUlioD d iscipl inary

prouedings , including the right to testify , present evi dence and witnesses, cross-examine
witnesses and chaJlenge statements presented to the discip linary body by presenting evidence

13

Case 14-3506, Document 35, 11/26/2014, 1380999, Page64 of 103

inconsistent with those statements. See Holt Memorandum of Law at 8. This 1S inapposite on a
number of fronts , First. the matter before this Court does not involve a disciplinary proceeding
under ~ S.f of the Stipulation and Order but rather the exercise of the RO' s Re'liew and Oversight
Authority under paragraph S.h. This is an enhanced power afforded the RO due to the intractable
corruption problem at the District Council that has nol yet been eradicated. See Stipulation and

Order at p. 3;

also Attadunent A at pp. 34. As explained by the RO, the Review and

Oversight Authority provision "reflects the intent of the parties to have the RO serve a fun ction
vital to systemic reform and vests the RO with the discretion to ...elo cenain maners upon

prescribed criteria."

Anachment A at p. 4.

As nOled, there are no procedures required or

mandated for the RO 's exercise of his Review and Oversight Authoriry . Thi s allows for the
stream lined removal of individuals who in the RO's judgment violate certain laws, fiduciary
duties or are inconsislent with the Stipulation and Order's objectives such as eradicating
corruption. Additionally, the procedures that the RO chose to promulgate and followed here do

satisfy rudimentary due process requirements.


As Mr. Holt's submission acknowledges, it was in cases in which a coun was cal led upon
to review a disciplinary decision by an official si milar to the RO where the rights he is press ing
fo r were di scussed. See Holt Memorandum of Law at 8, (ciling, e.g. , United States v. Tnt'l
Brotherhood of Teamsters, 247 F.3d 370, 386 (2d Cir. 2001 ). Moreover, even in that context,
the co urt did not prescribe the level of process Mr. Holt desires but rather found that that kind of
process had been employed in the particul ar disciplinary decision at issue, thus satisfying the due
process requirements applicable there . See United States v. inC! Brotherhood of Teamsters, 247
F.3d at 386. Similarly, the remarks by union counsel John T. Decarlo, Esq., that Mr, Holt refers

14

Case 14-3506, Document 35, 11/26/2014, 1380999, Page65 of 103

to invol ve disciplinary proceedings, not the RO's Review and Oversight Authority. See Ho lt
Memorandum of Law at pp. 8-9; ~ also Bisceglie Declaration at p. 6, ,. 19.

Tn sum , though the RO was empowered to exercise his Review and Oversight Authority
without following designated procedures, he established procedures providing for notice and an
opponunity to be heard and followed those procedures to the letter. MI. Holt received a Notice
of Possible Action indicating the conduct upon which the RO was considering
specific 5.h.iii subsections that might support a veto.

Do

veto and the

Having received notice thaI his

empl oyment might be vetoed based on his violation of the Job Referra1 Rules and related
conduct, Mr. Holt requested an opportun ity to be heard and attended a conference with the RO
and staff, accompanied by cOlUlsel of choice. He made plain hi s position and in so doing
indicated lilat he understood precisel y which incident the RO was considering as the basis fOT a
veto.

The RO also received evidence in the form o f the O'Flaherty Declaration and 1.1.

CaJlaban's report.. setting forlh surrunaries of witness interviews and corroborating phone
records, establishing Mr. Holt's misconduct.

Viewing thi s evidence and considering the

argwnents made by and for Mr. Holt at the conference with the RO, the RO found reasonable
cause to believe that Mr. Holt had violated the Job Referral Rules and essentially tried to obstruct
the investigation by lying to investigators and cho se to veto Mr. Holt 's employment for a number
of reasons, including thar his conduct was inconsistent with the objectives of the Stipu lation and

Order.

15

Case 14-3506, Document 35, 11/26/2014, 1380999, Page66 of 103

CONCLUSION

For all the reasons set forth above, the RO's veto of Mr. Holl 's employmenl as a
business representative of the New York Di strict Council ofCarpenlers sbould
be upheld .

Dated:

New York, New York


October 14,2010

Respectfully submined,

Bridget M. Rohde

Attorney for the Review Offi cer,


Dennis M. Walsh, Esq .
Mintz. Levin, Cohn, Ferris, Glovsky
And Popeo, P.e.
666 Third Avenue
New York, NY 10017

16
S043242v.1

Case 14-3506, Document 35, 11/26/2014, 1380999, Page67 of 103

Att. E

Case 14-3506, Document 35, 11/26/2014, 1380999, Page68 of 103

..

.,

UNITED STATES DISTRlCT COURT


SOUTlffiRN DISTRlCT OF NEW YORK

-------------------------------X

UNITED STA TES OF AMERlCA,


Plaintiff,
90 Civ. 5722 (RMB)

-against-

DISTRlCT COUNCIL OF NEW YORK CITY


AND VlCINITY OF TIffi UNITED
BROTHERHOOD OF CARPENTERS AND
JOINERS OF AMERICA, et al .,

Defendants.

-------------------------------------x
MEMORANDUM OF THE REVIEW OFFICER IN RESPONSE

TO THE

PETITION OF JOHN DALY

Bridget M . Rohde
Attorney fOT the Review Officer,
Dennis M. Walsh, Esq.
Mintz., Lev-in, Cohn, Ferris, Glavsky
and Popeo, P.C.
666 Third A venue
New York, NY 10017

Case 14-3506, Document 35, 11/26/2014, 1380999, Page69 of 103

PRELIMINARY STATEMENT

The Review Officer ("RO'') submits this memorandum in response to the appeal by John
Daly to the Court ofllie RO's veto ofM!. Daly' s employment as a business representative of the
New York District Counci! of Carpenters and the president of Local Union 608. The veto was a
proper exercise of the RO 's authority under Paragraph 5.b.iii afthe St ipulation and Order entered
in United States v. District Council of Carpenters, 90 Civ. 5722 (RMB) on June 3, 2010, and for

the reasons staled herein, and in the accompanying Declaration of Dennis M. Walsh, the veto
should be upheld.

TIIE STIPULATION AND ORDER


A.

Relevant Powers Pursuant to the Stipuiatjon and Order

By paragraph 3 of the Stipulation and Order, Dermis M. Walsh, Esq., was appointed
Review Officer of the New York City District Council of Carpenters ("District Council") and its
Benefit Funds. Following recent events in the District CoWlcil's long troubled history, as agreed
to by the Government, the District Council and the Benefit Funds and acknowledged by the
Court, "the presence and activity of an independent court-appointed officer granted powers"
beyond those provided in previous order.; in this matter is "essential to the eradication of
corruption and racketeering as they affect union carpenters and union employees." Slipulation

and Order at p. 3.
Among the powers afforded to the RO are Review and Oversight AuthOrity, including the
authority "to review the persons currently holding office or employmenl." [d. at

S. b.i(3).

Upon such review, the RO may determine, inter alia, that a matter violates a law or Court order
in this case, id. at ~ 5.b.iii(c); is contrary to a fiduciary responsibility imposed by 29 U.S .C. 501
or 29 U.S.C. 1001 el seq. (ERJSA). id. at' S.b.iii(d); or is inconsistent vrith the objectives of
the Stipulation and Order, id. at ~ 5.b.iii(e). If the RO makes such a determination., he "may vela

Case 14-3506, Document 35, 11/26/2014, 1380999, Page70 of 103

or require the District COWlcil to rescind its action, proposed action or lack of action." Id. at

5.b.iii.
B.

RO's Procedures for Action Pursuant to Paragraoh S.b of the Stipulation and
Order

The Stipulation and Order does not provide any procedwes that the RO is required to
employ in exercising his Review and Oversight Authority; it states that the RO may prescribe
procedures. See id. al

S.b. On June 21, 2010, the RO promulgated the procedures !hat he

wouJd follow "when detennining whether to take certain action pursuant to


Stipulation and Order," including in the veto context.

5.b.iii of the

As the RO noled in the Preliminary

Statement of his Procedures memorandum, the procedures were not required by the Stipulation
and Order but were being established to facilitate an efficient Dleans for the RO to make or
supplement a record and allow one to make a written submission to the RD. See Declaration of
Dennis M. Walsh, Exhibit 4 therelo (Attaclunent A).
As set forth in the Procedures promulgated by the RO, ifhe is contemplating a veto under
, 5.b.iil, he "Will send a written Notice of Possible Action to affected parties no later than 10 days
prior to issuing the veto. The RO provided that his Notice of Po ssible Action would include a
"concise statement of the matter under consideration," reference to which of the conditions in
5.b.i.ii(a)(e) might apply and an invitation for the parties given notice to make a Mitten
submission by a specified time stating facts, law or argwneots a party believes relevan1. The
Proced ures a1so provide th.al the RO, at his discretion, may invile the parries to appear 81 a Pre
Action Conference. Once the time for a wrinen submission andlor conference has passed, the
RO will take action pursuant 10 ,. 5.b.iii or not and, if he is tak..ing action, send a written decis ion
to the relevant parties. See id.

Case 14-3506, Document 35, 11/26/2014, 1380999, Page71 of 103

TIlE STANDARD OF REVIEW GOVERNING THE COURT


"TID RESPECT TO TIlE RO'. 11 S.h.iii VETOES
The StipuJation and Order provides that the RO's actions with respect to

S.b, which

includes the power to veto employment, ''may be reviewed by the Court upon a petition for
review by the Di soict Council, the Government, or any aggrieved person." Stipulalion and
Order at ~ 11.

The SripuJation and Order further provide s that "in reviewing the Review

Offi cer's decision the Court will apply the same standard of review applicable to review of final
agency action under the Administrative Procedure Act, 5 USC. 701 et seq ....

rd.

In an earlier

decisioD in this matter interpreting the comparable provision of the Consent Decree, the Court

(Haight, J.) held that under lO(e) of the APA, 5 U.S .C. 706, "a reviewing court determines de
novo ' all relevant questions of law. ", United States v. District Council. et 81 . (<<Fiorino"), 941 F.

Supp. 349, 36 1 (S. D.N. Y. 1996) (citing cases). " [n considering a relevant question of law under
the APA, the reviewing court asks whether the agency's action was 'arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law.'" ld. at 362 (citing 5 U.S .C 706
(2)(A)) . An agency's finding of facts "are entitled to affirmance" by the reviewing court " if they
are reasonable and supported by substantial evidence in the record as a whole." Id. (citation
omitted). The APA allows agency findings to be vacated "only if they are 'unsupported by
subSlaDtiai ev idence.'" Id. (citation omitted). Substantial evidence is mare than a mere scintilla,
but something less than the weight of the evidence, and the substantia] evidence standard may be
met despite the possibility of drawing two inconsistent conclusions from the evidence.

(d .

(citations omined).

PROCED!JRAJ. mSTQRY AND FACTS


On August 24, 2010, the RO issued a Notice of Possible Action to John Daly of Local
Union 608, indicating that based on

'i

S.b.iii of the Stipulation and Order he was "considering

Case 14-3506, Document 35, 11/26/2014, 1380999, Page72 of 103

issuing a veto of the employment and office of John Daly with the New York District COUDcil of
Carpenters and Local Union 608." See Attachment A, Exhibit 5.
Consistent with his Procedures, the RD then set forth the fOllowing facts together with
citation to the sections llDder which he was contemplati ng acting:
The facts and circumstances under review involve suspected violations of
the Consent Decree and the StipuJation and Order entered in this maner; to wil ,
(I) io or abou, January 19, 2009, and March 30, 2009, Mr. Daly knowingly
violated the Job Referral Rules by dispatchin~ a member or members of a
constituent local union to a job at 227 West 27 Street; and (2) on August 12,
20 LO, Mr. Daly gave fal se answers to questions posed by the Review Officer staff
regarding certain events of January 19, 2009 and March 30, 2009, and thereafter,
which were material to an investigation of suspected violations of the Job Referral
RuJes. Such conduct would present grounds for a veto pursuant to Paragraph
5.b.iii (c, d and eJ.

Id. As also provided by his Procedures, the RO invited Mr. Daly to make a written subm ission

by noon on Seplember 3, 20 JO. See id.


00 September 3, 2010, througb then-counsel John J. Fahy, Mr. Daly made a written
submission. The essence of this Jetter is that while his memory as to the events of January 19

and March 3D, 2009 is fuzzy, he "does not deny that he had people go to job sites" to shape jobs;
be taJked to union members James

PeDdergas~

Ronan McDermott and Damien Devlin about

shaping jobs; there was nothing inappropriate about that prior to USC trustee Frank Spencer's
September 30, 2009

m e morandwn ~

the cooduct is Dot criminal aad there is no suggestion he

profited from it; and he (Mr. Dal y) had not previously beell accused of or involved in criminal or
inappropriate conduct during the District Council 's "sordid past."

Anachment B.

On September 7. 2010, the RO issued a Notice of Veto of Mr. Daly 's employment. See

Anachrneot A, Exhi bi t 6. The RD exercised his judgmeot 10 issue a velo havi ng considered the
Declaration of William 1. O'Flaherty. a staff investigator for the RO, dated September 3,20 10,

Case 14-3506, Document 35, 11/26/2014, 1380999, Page73 of 103

'.

and the aforementioned lener by Mr. Fahy on Mr. Daly's behalf. See id., O'Flaherty Declaration
attached thereto; see also Attachment B.

In his declaration, Mr. O'Flaherty summarizes pertinent facts from the investigation into

Mr. Daly's violation of the Job Referral Rules.

Essential facts include information from

telephone records that Mr. O'Flaherty reviewed . Records show that on Friday, January 16, 2009,

Mr, Daly's cell phone received an incoming cali from the celi phone of the Shop Steward (S IS)
of the 227 W . 27m Street job site for KenstID' Canst. Corp .; a few minutes later that same day ,

Mr. DaIy's eel! phone made an outgoing call to the union-listed telephone number of James
Pendergast; about a half hour after

th~

'Mr. Daly's cell phone made an outgoing caJl to the

union-listed t.elephane number of Ronan McDermott;

OD

Monday morning January 19, 2009, in

quick succession., Mr. Daly's cell phone made a call to and received a call from the union-listed
number of Mr. Pendergast; the SIS report for the week of January 19. 2009 shows Messrs.
Pendergast and McDermon to have started working at the site for the first time that week but
neither man was on the union's out of work list at the time; and both Messrs. Pendergast and
McDermon "are listed as union workers in the 50/50 employment section of the SIS report, but
neither carpenter was sent by the District Council to the site." See Anachrnent A, Exhibit 6,
O'Flaherty Declaration at

~s

7-12,

On Friday afternoon March 27, 2009. afier Mr. Daly's ceU phone received an incoming

caU from the ceU phone of the SIS of the 227 W. 27 m Street job site, a similar panern of phone
calls unfolded between Messrs, Daly and Devlin starting Friday, March 27 through Monday,
March 30, 2009.

Like his brother union members Pendergast and McDennott, Mr. Devlin was

not on the District Council's out-of-work list at the lime he Stafled work al the job sile and he

Case 14-3506, Document 35, 11/26/2014, 1380999, Page74 of 103

was listed as auman-assigned member in the SIS report but he was not sent by the District
Council to the job sile. See id. at ~s 13-16
As Mr. O'Flaherty additionally relates in his declaration, on August 12, 2010 , he and the

RO's Chief lnvestigator Mitchell interviewed Mr. Daly at the District Council. Mr. Daly falsely
claimed that lDllon members Pendergast, McDermon: and Devlin had been requested by the

contractor al Lbe 227 W. 27111 Street job site off of the District Council out-of-work list ("OWL").
"When confronted with information thaI the members we re not on the OWL and that no requests
for these carpenters were made. Daly then admitted to contal::tiog the members with infonnalion
on the Kenstar Canst. Corp. job rat 227 W. 27'" Street} so they could shape work." Id. at ~ 18 .

Mr. Daly stated that "it wasn't unti l UBC Supervisor Frank Spencer met with the Business
Agents in September, 2009, when they were instructed to no longer engage in this activity." Id.
Based on the above, the RO issued the veto notice finding reasonabl e cause to believe
that (I) ''beginning on or about January 19,2009, to and including March 30, 2009, Mr. Daly
knowingly violated the Job Referral Rules by dispatching a member or members of a constituent
local union to a job at 227 West 27'" Street; and (2) on August 12, 2010, Mr. Daly gave false
answers to questions posed by the Review Officer staff regarding certain events of January 19,
2009 and March 30, 2009, which were material to an investigation of suspected violations of the
Job Referral Rules." See Atf<lchment A, Exhibit 6 .

Case 14-3506, Document 35, 11/26/2014, 1380999, Page75 of 103

ARGUMENT

Issuing the Veto Notice With Respect to John Daly's Employment as a Business
Agent and Holding Office as President of Local Union 608 Was ClearlY Within
The Authority Granted To The RO By The Stipulation and Order and Was Not
Otherwise Arbitrary and Capricious II

Mr. Daly claims that the RO's veto was arbitrary, capricious, an abuse of discretion and
otherwise not in accordance with law, asserting that !.he RO exceeded his authority under the
Stipul ation and Order, the union constitution and federal labor law. See Daly Memorandum of

Law at 8. Mr. Daly states tbat powers granted by

consent order must be strictly interpreted

according to the text of the document. See id. at 8-9. Yet Mr. Daly appears at rimes to be
referring to a different paragraph of the StipUlation and Order than the governing one (g.,

rather than

5.f

S.b). See id. at 9. Paragraph S,b plainly provided the RO authority to issue his veto

with respect to Mr. Daly. MI. Daly also makes other assertions that are fundamenta1ly addressed
to the scope of the RO's authority,
severity based
of

00

~.,

that the: RO imposed a sanction of "'unprecedented"

conduc t before the RO's appointment and before a September 30, 2009 memo

uec trustee Frank Spencer regarding the Job Referral Rules.

See id. at 8. These assertions

are addressed below as well.


As a general matter, the RO has been granted broad pOwer to eradicate corruption, see

Stipulation and Order at p. 3, and he has been specifically authorized to review "persons
currently holding office or employment" and to issue a veto if a person 's conduct violates the
Stipulation and Order in any of a number of ways, including if it is inconsistent with the

objectives of the Stipulation and Order. See Stipul ation and Order at

~s

S.b.i(3) and S.h. iii. The

plain language of the Stipulation and Order gives the RO Review and Oversight Authority over
both Mr. Daly's positions as a business agent of lbe District Council and as president of his
We address here Mr. Daly's Poin[ A (standard or review) and Poinl B (veto exceeded the RO's authority)
in this seenon as well as some points asserted elsewhere in his memorandwn because they are connected.

Case 14-3506, Document 35, 11/26/2014, 1380999, Page76 of 103

constituent local. Moreover, it was precisely with respect to these types of supervisory position s
that set a tone for the membershrp that the parties intended the RO to have this type of review
capabiliry. The issuance of a Veto Notice with respect to Mr. Daly was thus squarely within [he
purpose of tbe Stipulation and Order and the scope of [he RO's authoriry thereunder.
We agree with Mr. Daly that the RO's power musl be interpreted based on the document
at issue. Here, that document is the Stipulation and Order, entered into by the parties and so
ordered by the Court under the rubric of the Consent Decree. "Under New York law, '[i]t is well
settled that a contract is to be construed in accordance with the parties' intent, which is generally
discerned from the fow comers of the document itself.' ,,' ' [A) written agreement that is
complete, clear and unambiguous on i(S: face must be enforced according to the plain meaning of
its tenns.'" Travelers Casualty and Surety Co. v. Dormitory AuthorityState of New York. 20 10
WL 3419196, at *5 (S.D.N.Y. 2010) (citations omitted). Moreover, clear contractual language
does not become ambiguous by virtue of the interpretation given by a party to litigation. Sec
Bison Capital Corp. v. ATP Oil & Gas Corp., 2010 WL 2697121, at *9 (SD.NY 2010).
Contrary to Mr. Daly's position, these principles ma\::e plaiD that the RO acted in accordance

with both the iolent of the parties and the language of the StipulatiOD and Order in reviewing and

ve10ing Mr. Daly.


Ti ming ofMr. Daly's Conduct

We also note that the RO has not exceeded his authority based on the fact that he was
appointed on June 3, 2010 and Mr. Daty's conduct occurred in January and March of 2009. See,
~.,

OaJy Memorandum of Law at p. 3. The Stipulation and Order provides no time limitati on

whatsoever regarding the RO's exercise of his Review and Oversight Authority under

5.b.i ii .

Moreover, the Consent Decree was issued on March 4, 1994. The Consent Decree is the initial

Case 14-3506, Document 35, 11/26/2014, 1380999, Page77 of 103

'.

and overarching agreement entered during the trial of the District Council 00 civil racketeering
charges alleging, inter alia, that the District Council and its constituent locaJs were infected by
organized crime. See U.s. v. District Council ("Fiorino"). 941 F. Supp. at 355. Various officers
have been in place throughout the history of the Conseot Decree to help eradicate corruption,

with the RO being the most recent appointment with Lhe broadest powers. It would be unerly
inconsi stent with the purpose of the Consent Decree and of the Stipulation and Order to
superimpose a term limiting the RO to revieYoling current employees onJy going forward.
Similarly, Mr. Daly asserts that the RO acted arbitrarily and capri ciously because lvtr,
DaJy's conduct occurred before the UBC trustee's memo of September 30, 2009 regarding
adherence

(0

Job Referral Rules on pain of termination. The Job Referral Rules were already in

effect. Mr. Daly essentially seeks legitimization of violations that occurred in the period prior to
a memo stressing the importance of the rules. To do so wouJd be unerly at odds with the purpose
of the Stipulation and Order,
Treatment of Other Business Agents

Mr. Daly claims that the RO also acted arbitrari ly and capriciously by treating him
differently than other business agents who conducted themselves similarly, specifically by
imposing a sanction of "unprecedented" severity.

~.s...&:.,

Daly Memorandum of Lawai 8.

That is not a valid point of comparison. Mr. Daly has not been "sanctioned" or disciplined"; he
has not been fIned, suspended or expelled from membership. The RO is the first coun-appointed
officer in this matter to be given Review and Oversight Authority over persons currently holding
office or employment

As noted, the RO bas been given these broader powers to facilitate

eradication of corruption.

See Stipulation and Order at p. 3.

As the RO explained in his

declaration, "'(i]n approving the Stipulation and Order, Judge Halght found that 'it is entirely

Case 14-3506, Document 35, 11/26/2014, 1380999, Page78 of 103

clear that Increased efforts must be made to cleanse the District Council and its constituent locals
of corrupt and dishonest practices." See Attachment A at p. 3.

Moreover, lhe policies of the

UBC trustee Frank Spencer or any other union official are not a valid point of comparison. The
responsibilities of the RO and the USC trustee are separate and distinct. As noted in the RO's
declaration., after the UBC trustee removed. Michael Forde from power and asswned authority
over the District Council in August 2009, be "prudently stated the position of the District
Council regarding violations of the Job Referral Rules and reinforced for all concerned what they
already knew: that violating the Consent Decree is a very serious matter." Attachment A at p . 8.

We also note that the UBC trustee did not discipline Mr. Daly. Finally in this regard, we note
that the RO has vetoed another business agent, John Holt, for violating the Job Referral Rules.
The veto of Mr. Daly was also entirely appropriate and consistent with the effort to cleanse the
District Council, to borrow Judge Haight's phrase.

Due Process
Mr. Daly claims that the RO also acted arbitrarily and capriciously by not affording him
certain process. See Daly Memorandum of Law at 9.

In making Ilti s argument, Mr. Daly

appears to be referring to the RO's Discipline Authority lUlder '15.f. of the Stipulation and Order
rather than hi s Review Authority Wlder 1 S.b.
procedures pursuant to

While not required to follow any particular

S.h, the RO promulgated procedures and foUowed them to the tetter.

Preliminarily, because the RO is not a state actor, there was no constitutional right of due
process. See United States v . In!'1 BrotherhO<Xi of Teams",rs. 941 F.2d 1292. 1295-1297 (2d
Cir. 199 1). Mr. Daly implicitly recognizes this. as he must.
AdditionaJly. by its express terms, the Sti puJalion and Order does not impose procedwes
for the RO 10 foUow in exercising his Review and Oversight Authority . The Stipulation and

10

Case 14-3506, Document 35, 11/26/2014, 1380999, Page79 of 103

Order states that the RO may prescribe procedures. See Stipulation and Order at

-a S.b. As

indicated supra, the RO in fact promulgated procedures that he would follow "when determining
whether to take certain action pursuant to

5. b.iii of the Stipulation and Order," including in the

veto context, in order to facilitate an efficient means for the RO to make or supplement a reco rd
aod allow one to make a written submission or orally conference \\-ith the RO. See Anachmenl
A, Exhibit 4. These procedures include notice of possib le action to the individual involved and
time for that individual to submit a detailed response \Vith all relevant facts, arguments and legal
principles and exhibits. Mr. Daly was plaloly aware of tbe procedures and their purpose.
Mr. Daly claims that "fa]t

DO

point was [he] permi ned an opportunity to cross-examine

witnesses, offer his own 'Nitnesses. or otherwise challenge the allegations against rum or offer
mitigating evidence."

See Daly Memorandum of Law at

fundamentally. incorrect.

to.

This is inapposite and,

First, as noted, the matter before this Court does not involve a

disciplinary proceeding under

5.f of the Stipulation and Order but rather the exercise of the

RO 's Review and Oversight Authority under 1 S.b. lbis is an enhanced power afforded the RO
due to the intractable corruption problem at the District Council that has not yet been eradicated.
See Stipulation and Order at p. 3;

also Anachrnent A at pp. 3-4. As explained by the RQ, the

Review and Oversight AuthOrity provision "reflects the intent of the parties to bave the RO serve
a function vital to systemic refonn and vests the RO with the discretion to veto certain matters
upon prescribed criteria."

Attachment A at p. 4.

That there are no procedures required or

mandated for the RO's exercise of his Review and Oversight Authority over the hoi cling of office
or employment allows for the streamlined removal of individuals who in the RO's jud.g.ment
violate certain laws, fiduciary duties Or are inconsistent with the Stipulation and Order's
objectives such as eradicating corruption.

II

Case 14-3506, Document 35, 11/26/2014, 1380999, Page80 of 103

We note I.ha1 it was in a case in which a court was called upon to review a disciplinary
decision by an official similar to the RO where the rights i\.1r. Daly is pressing

fOT

were

discussed . See. M., Daly Memorandum of Law at 910 (citing, e.g., United States v. Int'l
Brotherhood of Teamsters. 247 F.3d 370. 386 (2d Cif. 2001)). Moreover, even in that context ,

the court did nOl prescribe the level of process Mr. DaJy desires but rather found that tha! kind of
process had been employed in the particular disciplinary decision at issue, thus satisfying the due
process requirements applicable there. See United States v. 101' 1 BrotherhoQd of Tearosters. 247

F.3d at 386.
That said, though tbe RO was empowered to exercise his Review and Oversight

Authority without following designated procedures. he established procedures providing for


ootice and an opportunity to be heard and followed those procedures to the lerter. Mr. DaJy
received a Notice of Possible Action indicating the conduct upon which the RO was ronsidering
a veto and the specific 5.b.iii subsections that might support a veto, Having received notice that
his employment as a business agent and his presidency of Local Union 608 might be vetoed
based on his violation of the Job Referral Rules and related condu~l, Mr. Daly took advantage of

his opponuniry to be heard and. made a submission through counsel of rus choice in response to
the notice. His submission made plain that he understood precisely which incidents the RO was

considering as the basis for a velo. In all other regards, Mr, Daly decUned to participate in the
process in any deeper way and waived any further benefits of the procedures. The RO received
evidence in the form of the O ' Flaherty Declaration, setting forth, inter alia, proof received
including telephone reco rds showing contact between phone numbers assigned to Mr. Daly and
union members

Penderg~

McDennott and Devlin at the pertinent time and Shop Steward

reports showing that none of these men were on the Out of Work List when they started their

12

Case 14-3506, Document 35, 11/26/2014, 1380999, Page81 of 103

employmeot at the 227 W. 27111 Streel job site and subsequeDtly lisled on the SS reports as unionreferred members. Viewing this evidence, counterpoised by Mr. Daly's submission, the RO
found reasonable cause to believe Mr. Daly violated the Job Referral Rules by sending union
members Pendergast, McDermon and Devlin to the 227 W. 271h Street job site and chose to veto

Mr. Daly's emplo)'lTJent for a number of reasons, including that his conduct was inconsistent

eMr.

with the objectives of the Stipulation and Order.

Daly's then-counsel submitted an

additionallener to the RO, to which the RO immediately responded.)


Mr. Daly had the opportunity under the RO's procedures to submit proof be thought
supportive of his position when he made the

~Titten

submission to the RD. Mr. Daly could have,

for example, chosen to submit a decJaration of hig own Or declarations by any other individuaJ s
with relevant information. He made

choice by not doing so and shouJd not

DOW

claim that he

was denied process wben he in fact cbose not to fully take advantage of the process in place.
B.

Under the Applicable Standard of Review. the RO's Veto Notice Should Be
Upheld

Mr. Daly asserts as his final point that "it is clear that {the RO's veto] contains ' no

satisfactory explanation for its action,' let alone 'a ratiooaJ connection between the facts found
and the cboice made.'" Daly Memorandum of Law at 10. Mr. DaJy then reiterates his positio n

that he received inconsistent treatment, asserts that it is. plain the RO did not consider relevant

facts and repeats that his conduct predated the RO', appointment and the September 30. 2009
Spencer memo. See id. at 10-11. We focus on the unsupponed assertion that the RO did not
consider the relevant facts in this concluding section.

As sct forth supra, in considering a relevant question of law undeT the AP A, the
reviewing court asks whether a decision was "arbitrary, capricious, an abuse of discretion

13

Or

Case 14-3506, Document 35, 11/26/2014, 1380999, Page82 of 103

,,

otherwise not in accordance with law." Fiorino. 941 F. Supp. at 362.

Whether there were

sufficient facts to support a decision turns on the substantial evidence rule. Id.
The RO must determine only that lhere is substantial evidence of such a violation having

occurred. Such a determination is left to his sound discretion. He performs a specialized and
enumerated oversight role pursuant to the Stipulation and Order and his detenninations are
entitled to great deference by the Coun,

See, e.g., Uruted States v. 1n!'1 Brotberhood of

Teamsters, 905 F.2d 610, 616 (2d Cir. 1990). The RO is entitled to "some latitude in basing
decisions upon his own perceptions, conclusions, and assertions regarding the information he has

received." United States v. District Council, 880 F. Supp. 1051 , 1068 (S.D.N.Y. 1995).
Substantial evidence, though more than a mere

sclntill~

is less than the weight of the

evidence. and the substantial evidence standard may be met despite the possibility of drawing
two inconsistent conclusions from the evidence. Fi orino. 941 F. Supp. at 362. The RO is not, as

a prosecutor would be, required to demonstrate proofbeyocd a reasonable doubt or even satisfy a
clear and convinCing evidence standard.
Based upon the evidence presented to the RO in Mr. O'Flaherty's Declaration, hi s review

of the written submission on Mr. Daly's behalf made by !tis

then~counsel,

and his considerable

experience as a prosecutor and staff for one of his predecessors in this matter, Investigations and
Review Officer Kenneth Conboy.

Attachment A at pp. 2-3, it was clearly within the RO' s

discretion to find reasonable cause to believe that (I) "beginning on or about January 19.2009,
to and including March 30, 2009, Mr. Daly knowingly violated the Job Referral Rules by
dispatching a member or members of a constituent local union to a job at 227 West 271.h Street;
and (2) on August 12, 2010, Mr. Daly gave false answers to questions posed by the Revi ew
Officer staff regarding certain events of January 19, 2009 and March 30, 2009, which were

14

Case 14-3506, Document 35, 11/26/2014, 1380999, Page83 of 103


h

materiaJ to an investigation of SUSpeCled violations of Ihe Job Referral Rules." See Attachmenl
A, Exhibit 6.
The RO reviewed the relevant evidence, including swnmaries of telephone records and
Shop Steward reports contained within the O'Flaheny Declaration. His decision that Mr. Daly
sent union members Pendergast, McDermott and Devlin to the 227 W. 27th Street job site in
violation of Job Referral Rules is consistent with the facts and the logical inferences from those
faclS. Moreover, to the extent his assenion regardjng iOCODsistenl treatment so implies, the veto
is nOI a product of bad faith. Sec. y., James Madison Limited v. Ludwig, 82 F.3d I08S , 1095

(D.C. Cir. 1996). Quite the opposite. it is an instance of the RO exercising his independent duty
under , S.b of the Stipulation and Order to review persons currently holding office or
employment with the District Council or its constituent locals as part of his broad mandate

10

eradicate corruption and racketeering as they affect union carpenters and union employees, See
Stipulation and Order at p. 3;

also Attachment A a1 p. 4 . The veto was entirely appropriate

and consistent with the effort to cleanse the Djstrict Council.


The RO acted within his authority to review Mr. Daly's employment and the evidence
supported a veto of his employment by the RD. The RO's decision should stand.

2J

We note that Mr. Daly's submission includes an affidavit by him. Under me goveming standard of review,
a COUJ1 does nnt engage in fact finding and substitute its ruo\Ulion of the facts for that of the agency. ~ ~ . ,
James Madison Limited v. Lydwig, 82 F.Jd at 1096. In IIny event, cfte case remains that the faru meet the
subs'tantial evidence standard and the veto decision was not arbitrary or capricious.

15

Case 14-3506, Document 35, 11/26/2014, 1380999, Page84 of 103

"

.~

CONCLUSION

For all the reasons set forth above, the RO's veto of Mr. Daly's employment as a
business representative of the New York District Council of Carpenters and president of Local
Union 608 should be upheld.
Dated:

New York, New York


October 27, 2010

Respectfully submitted,

Bridget M. ohde
Attorney for the Review Officer,
Dennis M. Walsh, Esq.
Mintz, Levin, COM, Ferris, Glovsky
and Popeo, P.C.
666 Third Avenue
New York, NY 10017

16
5043242v.l

Case 14-3506, Document 35, 11/26/2014, 1380999, Page85 of 103

Att. F

Case 14-3506, Document 35, 11/26/2014, 1380999, Page86 of 103

UNITED STATES D1STRlCT COURT


SOUTHERN orSTRICT OF NEW YORK

-------------- ------------------------x

UNITED STATES OF AMERICA,


Plaintiff,

90 Civ. 5722 (RMB)

DISTRlCT COUNCIL OF NEW YORK CITY


AND VICINITY OF THE UNITED
BROTHERHOOD OF CARPENTERS AND
JOINERS OF AMERICA, 01 aI.,
Defendants.

-----------------------------------------x
In re: the Petition of John Holt.

DECLARATION OF DENNIS M. WALSH


Pursuant to the provisions of 28 U.s .C. 1746, Dennis M. Wal sh declares under penalty

of peIjury as follows:

r serve as the Review Officer in the maner of United States v. District Council, et aI., 90
eiv . 5722 (SDNY; RMB) . I was appointed PU1Suant to the terms of the Stipulation and Order

entered in this case on June 3, 2010.


This is a civil racketeering action originally filed in 1990. The supplemental complaint
alleged rampant corrupt conduct involving the New York District Council of Carpenters

committed by members of the District Council, members and associates of La Cosa Nostra, and
contractors going back

(0

!be 1970s. The civil RICO matter was settJed pursuant to the terms of

Case 14-3506, Document 35, 11/26/2014, 1380999, Page87 of 103

a Consent Decree entered in 1994. The Consent Decree permanently enjoins the District Council
and its members from violating its tenus and committing any act of racketeering. r

The District Council was the central eoterprise in the indictmenl filed by the United
States Attorney for: the Southern District of New York in August 2009 (which named various
fiduciaries of the District Council, including its top official , Executive Secretary-Treasurer
Michael 1. Forde, and John Greaney, the business manager of Local Union 608, as defeodants).
All eight of the Union officials named in the indictment have since pleaded guilty to charges in
the indictment The District Council was also placed under supervision in August 2009 by its
parent entity, the United Brotherhood of Carpenters and Joiners of America.
As documented by the record assembled in these and criminal matters involving the
District Council, the administration, governance and finances of the Union have been plagued by
corruption - spelled only by zealous action of the Court. the government. col.Dt-appointed
officers and periods of lruSleesbjp imposed by the United Brotherhood of Carpenters -- for over
thirty years. The record also demonstrates that efforts to achieve systemic reform have been

trampled by the seemingly limitless capacity of certain members of the District Council to
disregard the orders of this Court and fedcraJ law.
I have direct experience in dealing with aspects of this tortured history.

From 1994

through 1998, while I was practicing at Mudge Rose Guthrie Alexander & Ferdon and then
Latham & Watkins, I assisted Kenneth Conboy in his role as the Investigations and Review

t Paragraph 4.h of the Consenl D:ree also incorporates Job Referral Rules which, iliough modified by the
authority of the IRQ and by order of the Court over the years, require that all job referraJs by the Union
(sometimes referred to as "'dispatches") be from an ordered list kept by the District Council.
[Computerized, centralized and exclusive dispatching by the District Council was approved by the IRQ in
or about 1998.] Business agents may not make referrals. The onginaJ Job Referral Rules incorporated by
the Consent Decree, the Coon's Order of May 26, 2009, (modifying the Rules with respect to the SOJ50"
ratio of <'union referred men" to "company men" on each job) and the Bylaws of the District, including
Section 15 regarding the Job Referral Rules, are attached hert10 as Exhibits I, 2, and J respectively.

Case 14-3506, Document 35, 11/26/2014, 1380999, Page88 of 103

Officer ("IRO") appointed pursuant to the terms of the Consent Decree. I was the principal
drafter of nine semi-annual reports submitted by the IRO to the District Court regarding the
IRO's undertakings. Among other duties, I defended vetoes aCthe fRO , deposed, interviewed

and interfaced with Union members, officials, and contractors, ran union elections, attended local
union meetings, monitored compliance with the Consent Decree's job referral rules, reviewed

count..Jess records, prosecuted di sciplinary charges against Union members and worked with law
enforcement agencies to enforce the Consent Decree.

I became thoroughly familiar with

legitimate and corrupt activity within the Union, at construction sites, and at exposition venues,
and with the jUegal practices engaged in by certain members of the Union and construction

contractors.
The role of the Review Officer ("RO") is very simi.lar to that of the Investigations and
Review Officer ("OW"). As observed by Judge Haight in his memorandum of June 2, 2010
(approving the Stipulation and OrdeT) it is fair to say that in his powers and responsibilities, the
RO created by this Stipulation more closely resembles the fRO created by the Consent Decree

than the l.l. ["Independent Investigator"] created by the 2002 and 2005 orde"." Memorandum
of June 2, 2010, at 5.

In approving the Stipulation and Order, Judge Haight found that "it is entirely clear that
increased efforts enust be made to cleanse the District Council and its constituent locals of
corrupt and dishonest practices. The appointment of a Court officer with increased powers is
vital to that purpose." Id. at 6.

Fifteen years ago, Judge Haigh1 found that the m.O was appointed to "clean up the Union,
and was given broad powers with which to perform that task." United States v. District COWlcil.
880 F. Supp. 1051, 1068 (S.D.N.Y . 1995 ). The Court also found that ''the IRO is entitled to

Case 14-3506, Document 35, 11/26/2014, 1380999, Page89 of 103

some latitude in basing decisions upon his own perceptions, conclusions, and assertions
regarding the information be bas received. It was not the purpose of the Consent Decree that
every action of the m.O would be [ought i.n Court and that the credibility and trustworthiness of
the IRO would need to be established anew with every contemplated action.

The Court

recognizes that such a presumption may have the effect of limiting the current leadership's
control of the affairs of the union. The District Council, however, gave up a substantial. measure
of its autonomy when it entered into the Consent Decree." [d. at 1069. The same can be said of
the present situation and the S(jpulation and Order.
Paragraph S.b of the Stipulation and Order sets forth certain Review and Oversight
Ilulhorily of the RO. It addresses matters involving the administration, governance and fmances
of the District Council (defmed by the Stipulation and Order as including ilS local unions;
Stipulation and Order Paragraph l.b) and the Benefit Funds. The provision reflects the intent of
the parties to have the RO serve a function vital to systemic reform and vests the RO with the
discretion to veto certain maners upon prescribed criteria This is a broad provision which
expressly grants to the Review Officer the authority to take action, in ills discretion, in a number
of coctexts (all in the best interests of the District Council and its members) and includes the
authority to address matters "inconsistent with the objectives of trus Stipulation and Order. "
Stipulation and Order, Paragraph S.b.i ii (e).

I.n m y view, this provision requires the RO to

always consider what is in the best interests of the District Council and its members, especially
considering the decades-long history of corruption and the vexing inability of prior efforts to rid
the Union of this plague. It recognizes that there can be no tolerance for anything less than best
practices in the governance of the DLstrict COWlcll, including prudent management of risk and
strict enforcement of applicable law and the Court's orders.

Case 14-3506, Document 35, 11/26/2014, 1380999, Page90 of 103

[ do not see Mr. Holt's serving as a business agent of the District COWlciJ as being
consistent with the objectives of the Stipulation and Order; nor do I see such service as being in
the best interests of the District Council and its members. There is substantiaJ evidence in the
record that (i) on September 21, 2009, Me. Holt received a call at 12:51 p.m. from the Dishict
Council shop steward at the job at 2201 Nostrand Avenue, Brooklyn, stating that a Union
carpenter was needed at the job; Oi) that less than two minutes later, at 12:53 p.m., Mr. Holt

caUed Richard Huggins. whom he had engaged to do plumbing work on his upstate home, to go
to the Nostrand Avenue job and begin work the very next day, (iii) which

Mr. Huggins did, and,

further. (iv) that when Mr. Holt was asked the next morning by the steward whether Mr. Hugg.ins

had come off the

out-of~work

Ust., Mr. Holt began efforts to cover his tracks. Those efforts

included making untrue statements to the court-appointed Independent Investigator.

See. in

particuJar, paragraphs 13 and 14 of the report of the lndependent investigator, attached to the
O 'Flaherry Declaration,. Exhibit 4 hereto. Mr. Holt repeated his version of events to me and to
Investigator WiUiam O'Flaherty on August 27, 2010,
That Mr. Holt was involved in a scheme to violate me Job Referral Rules, apparently for
self-gain, and aJso lied to Court-appointed officers about his conduct, renders him unfit to serve
as a business agent of the District Council. Prudence requires that he not playa role in the
administration of its business. 2
The Stipulation and Order establishes no limitation on the RO's authority to consider
events which occurred before his appointment as being relevant to a decision to veto a matter
pursuant to Paragraph 5.h.iii. As an example, if. arguendo, the RO knew or discovered that an

Paragraph 7 of the Stipulation and Order requires District Council employees and members to cooperate
with the Review Officer. The Court's August 22, 2005 Order regarding the Job Referral Rules and the I.l.
similarly required cooperation with the LT. Further, the making of a materially false statement to or
obstruction of an undertaking of a court-appointed officer may violate 18 U.S.C. 1 503.

Case 14-3506, Document 35, 11/26/2014, 1380999, Page91 of 103

employee, official or fiduciary of the District Council had been admitted inlo membership in the
Genovese crime family in 2001, the \leta provision would have to be considered a nullity if the

RO couJd not veto that person 's present employment or office upon such grounds . Such an
interpretation would be indefensible, as it would contravene a core purpose of the Consent
Decree and Stipulation and Order. In another CODte~ any contract in ex istence Oil June 2, 2010 ,
would have been executed before the appointment of the RO, yet, as a current contract, the RO

has the aulhority to review and velO such contract


Paragrapb 5.b is not a disciplinary provision. The petitioner bas not been disciplined nOr
subjected to disciplinary proceedings by the veto of the RO. The disciplinary authority of the
RO is separately stated in Paragrapb 5.f. which forms no part ofa.JJd is not relevant to the present
proceeding. [Even if Paragrapb 5.f were at issue, it expressly does not limit the time in which
the misconduct forming the basis for discipline may occur.)
That Mr. Holt was suspended for a brief period by Frnnk Spencer. the District Council
Supervisor (from the United Brotherhood of Carpenters and Joiners of America) pursuant to his
authority does not act as a bar to action by the Review Officer pursuant to Paragraph S.b. Mr.
Spencer is an employer, a manager. He saw fit to discipline an employee. The Review Officer is
independent from the Union and is oat bound by the judgmeot or actions of the Supervisor. See
the final "V/hereas" clause. Stipulation and Order at 3. Memorandwn of June 2, 2010 , at 4-5 .
further, considering the objectives of the Stipulation and Order, my responsibilities, and that Mr.
Holt violated an order of this

COW1

and lied to two court-appointed officers, I consider veto of

his employment pursuant to Paragraph 5.h.iii the appropriate response and in the best interests of

the District CounciL 3

Mr. Holt's oounseil1lised the fact cfSpencer's action before and aI the conference on August 2711'.
6

Case 14-3506, Document 35, 11/26/2014, 1380999, Page92 of 103

Paragraph 5.leiv of the Stipulation and Order (cited by Mr. Holt) -- regardiog the RO's
supervision of elections and the authority of the RO to approve candidates - is aJso not at issue
and is not relevant to the matter before the Court.

On June 21, 2010, I adopted and promulgated procedures that would be used in maners
undertaken pursuant to Paragraph 5.h. They establish a clear and fair process by which affected
persons may present evidence 10 the RO after receiving a Notice of POsslble Action of the
Review Officer (UNPA"). The Procedures were served upon the Petitioner with a detailed NPA

via courier on August 6, 2010. The Procedures and NPA are attached hereto as Exhibits 5 and 6.
The NPA clearly set forth the C<lntemplated action and the basis for tbe action. The NPA
al so expressly stated that the petitioner had a specific time period in which to provide the RO

with a detailed response.


Pursuant to Paragraph S.b.iii of the Stipulation and Order entered on June 3, 2010,
in the matter of United States v. District Council. 90 Civil 5722 (SDNY), please be
advised that the Review Officer is considering issuing a veto of the employment of John
Holt with the New York District Council of Carpenters.
The facts and circumstances under review involve suspected violations of the
Consent Decree and the Stipulation and Order entered in thls matter; to wit (l) beginning
on or about September 21, 2009, Mr. Holt knowingly violated the Job Referral Rules by
dispatching a member of a cooslituent local union to a job in lhe jurisdiction of the
District Council; (2) 00 or about September 22. 2009, and at times thereafter, including
on or about October 16, 2009, Mr. Holt eogaged in acts intended to obstruct lawful
investigation of his violation oftbe Job Referral Rules; and (3) on September 22 and
October 16,2009 , Mr, Holt gave false answers to questions posed by the office aftbe
Independent [nvestigator regarding material aspects of the aforementioned material
matters occurring on and between said dates. Such conduct would present grounds for a
veto pursuant fO Paragraph S.b.uj (e, d and e).
Pursuant to procedures promulgated by the Review Officer to supplement the
record in such matters (enclosed), you may deliver a written submission to this office via
email staring any facts, law or arguments (and appending any exhibits) which might be.
in your view, relevant to consideration of this matter, Sajd submission must be delivered
by ooon 00 August 19, 2010.
7

Case 14-3506, Document 35, 11/26/2014, 1380999, Page93 of 103

Aware of his options and the applicable process, fv1r. Holt chose to respond by waiving
his right to deliver a written submission to the RO and had rus attorney request an in-person
meeting. I agreed to that request and a conference was held on August 27 th in which Mr. Holt
and his attorney, Mr. Bisceglie, articulated Mr. Holt's version of the underlying events and, after

being given a copy of the l.l.'s report, further asked me to accept the propositions that (i) the caJl
placed by Mr. Holt to Mr. Huggins at 12,S3 p.m. 00 September 21, 2009, had oothing to do with
the Nostrand Avenue job, but pertained solely to an urgent need to arrange plumbing work on Mr.
Holt's home and (ii) Mr. Huggins appearance the next day at the Nostrand Avenue was mere

coincidence.
The procedures eSlBblished by this office for Paragraph S.b proceediogs are appropriate
in sC{)pe and effect and insure fundamental fairness for affected parties. 'Mr. Holt chose

DOt

to

deliver a detailed written submission but participated in a meeting with the RO in which the
matter was discussed in detail. He shouJd nol be burdening the Cowt with spurious arguments
about procedural infirmities.
For all of the foregoing reasons, as well as those stated in my accompanying
Memorandum of Law, the well-considered and procedurally sound veto at issue sbould be
affirmed and

we petition for review dismissed .

~JUtlkt~'-L

Dated: White Plains, New York


October 12,2010

Dennis M. W rush

Case 14-3506, Document 35, 11/26/2014, 1380999, Page94 of 103

Att. G

Case 14-3506, Document 35, 11/26/2014, 1380999, Page95 of 103

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

----- ----------------x
UNITED STATES OF AMERICA.
90 Civ. 5722 (RMB)

Plaintiff,
v.
DISTRICT COUNCIL OF NEW YORl< CITY

AND VICfNlTY OF THE UNITED

BROTHERHOOD OF CA RPENTERS AND

JOINERS OF AMERICA, el aI.,

Defendants.

-------------------------------x
In re: ltle Pelition of JOM Daly.

DECLARATION OF DENNlS M. WALSH


Pursuant to the provisions of 28 U.S.c. 1746. Dennis M. Walsh declares under penalty
of perjury as follows:

I serve

IlS

the Review Officer in the matter of United States v. District Council. et 81., 90

Civ. 5722 (SONY; R.M'S). f was appointed pursuant 10 the terms of the SlipuJaLion and Order
entered in this case on June 3, 20] O.

11ti.s is a civil racketeering actiOD originally filed in 1990 . The supplemental complaint
alleged rampant corrupt conduct inVOlving the New York District Council of Carpenters

commined by members of the District Council, members and associales of La Cosa Nostra. and
contractors going back to the 19705. The civil RlCO maner was settled pursuant 10 the tenns of

Case 14-3506, Document 35, 11/26/2014, 1380999, Page96 of 103

a Consent Decree entered in 1994. The Consent Decree pennanently enjoins the Di strict Council
and its members from violating its terms and committing any act of racketeering. I
The District Council was the central enterprise in the indictment filed by the United
States Attorney for the Southern DistriCT of New York in August 2009 (which named various
fiduc iaries of tbe District Council, including its top official, ExecUlive Secretary-Treasurer
Michael 1. Forde, and John Greaney, the business manager of Local Union 608, as defendants).
All eight of the Union officials named in the indictment have since pleaded guilty to charges in
the indictmenl

As docwnented by the record assembled in these and criminal maners invo lving the
District Council, the administration, governance and finances of the Union have been plagued by
corruption - spelled only by zea1olJ.') action of the Court., the go vernment, court-appointed
officers and periods of trusteship imposed by the United Brolherhood of Carpenters - for Over
thirty years. The record also demonstrates that effons to achieve systemic reform have been
trampled by the seemingly limitless capacity of cenain members of the District Council 10
disregard the orders of this Court and federal law.
I have direct experience in dealing with aspecLS of this deeply troubled history. From
1994 through 1998, while 1 was practicing at Mudge Rose Guthrie AJexander & Ferdon and then
Latham & Watkins, I assisted Kenneth Conboy in his role as the Investigations and Review
Officer ("IRO'') appointed pursuant to Lhe terms of the Consent Decree.

I was the principal

I Paragraph 4.h of the Consent Decree also incorpoflltes Job RcfelT8l Rules which, though modified by the
authority of the IRO and by order of the Court over the years, require thai all job referrals by the Union
(somet imes referred to as " dispatches, be from an ordercxj list kept by the District Council.
Computerized. centralized and el(clusive dispatching by the District Council was approved by the tRO in
or about 1998.] Business agents may not make referrals. The original Job Referral Rules incorporaled by
Ihe Consent Decree. the Court's Order of May 26, 2009. [modifying the Rules with reipect 10 the "SO/50"
rario of " Union-referred Men" ("'U's" on steward reports) (0 "'Company Men" rC's") on each job) and
the Bylaws of the District., including Section 15 regarding (he Job Referral Rules, are attached hereto as
ExhibilS 1,2, and 3 respectively .

Case 14-3506, Document 35, 11/26/2014, 1380999, Page97 of 103

drafter of nine semi-annual reports submitted by the IRO to the District Court regarding the

IRO ' s undertakings. Among other duties. I defended vetoes of the IRO, deposed, interviewed
and ioterfaced with Union members. officiaJs, and contractors, ran union electiollS., attended local
unioo meetings. monitored compliance y,tjlh the Consenl Decree's job referral rules, reviewed
countless records, prosecuted discipl inary charges against Union members and worked wilh law
enforcement agencies to enforce the Consent Decree.

I became thoroughly famiJiar with

Jegiti.mate and corrupt activity within the Union, at construction Siles, and at exposition venues,
and with the illegal practices engaged in by certain members of the Uruon and construction
COntractors.
The role of the Review Officer (" RO") is very similar to thai of the lnvestigations and
Review Officer ("IRa''). As observed by Judge HaiB,hl in his memorandum of June 2, 2010
(approving the Stipulation and Order) "il is fair to say that in his powers and responsibilities, the
RO created by this Stipulation more closely resembles the IRO created by the Consent Decree
than the

I.e

["Independent Investigator"j created by the 2002 and 2005 orders." Memorandum

o f June 2, 2010, al 5.
In approving the Stipulation and Order. Judge Haighl found that " it is entirely clear that

increased efforts must be made to cleanse the District Council and its constituent locals of

corrupt and dishonest practices. The appointment of a Court officer with increased powers is
vilal to that purpose." [d. at 6.
Fifteen years ago, Judge Haight found that the IRO
and was given broad pOwers with which

(0

WllS

appointed to "clean up the Unioo,

perform thatlaSk ." United States v. District Council.

880 E Supp. 1051 , 1068 (S. D.N.Y. 1995). The Coun aJ so fouod Unn !.he fRO is entiLied

10

some latitude in basing decisions upon his own percc:ptions, conclusions. and assertions

Case 14-3506, Document 35, 11/26/2014, 1380999, Page98 of 103

regarding the iofonnation he has received. II was not the purpose of the Consent Decree that
every action of the IRO would be fought in Court and that the credibility and trustworthiness of
the IRO would need to be established anew with every contemplated action.

The Court

recognizes that such a presumption may have the effecl of limiting the curren I leadership 's

contro l of the affairs of the union. The District Council, however, gave up a substantial measure

of its autonomy when it entered iota the Consent Decree." Id. at 1069. The same can be said of
the present situation and the Stipulation and Order.
Paragraph S.b of the Stipulation and Order sets forth certain Review and Oversight
authority of the RO. II addresses maners involving the adm.inisb"alion, governance and finances
of the District Council (defined by the Stipulation and Order as including its local unions;
Paragraph l.b) and the Benefit Funds. The provision renee!s the intent of the parties to have the

RO serve a function vital to systell1ic reform and vests the RO with the discretion to velO cer1ain
matters upon

prescri~

Officer the authority

to

criteria. 1bis is a broad provision which expressly grants to the Review

lake action, in his discretion, io a number of conlexts (al l in the best

interests of the: District Council and its members) and includes the authority to address matters
"inconsistent with the objectives of this Stipulation and Order." Paragraph S.b.iii (e). In m~'
view, this provision requires [he RO to always consider what is in the best interests of the

District Council and its members, especially considering the decades-long history of corruption
and the vexing inability of prior efforts 10 rid the Union of this plague. It recogni:z.es thal there
can be no tolerance for anything less than best practices in tbe governance of the District Council,
including prudent management of risk and suic( enforcement of applicabJe law and the Court's
orders.

Case 14-3506, Document 35, 11/26/2014, 1380999, Page99 of 103

The Stipulation and Order establishes no limitation on the RO 's authority 10 consider

events which occurred before his appointment as being relevant to a decision fo veto a matter
pursuant to Paragraph S.b.iii. As an example, if, arguendo, the RO knew or discovered that an
employee, official or fiduciary of the District Council had been admined into membership in the
Genovese crime family in 2001, the veto provision would have to be considered a nullity if the
RO cou1d nol vela thai person's presenl employment or office upon such grounds. Such an
interpretation would be indefensible, as it would contravene a core purpose of the Consent
Decree and Stipulation and Order. In anOlher context, any contract in existence on June 2,2010.
would have been executed before the appointment of the RO, yet, as a current contract, the RO

has the authority to review and veto such contract


Paragraph S.b is not a disciplinary provision. The petitioner has not been disciplined nor
subjected to disciplinary proceedings by the vetO of the RD. The disciplinary authority of the
RO is separately stated in Paragraph S.f. which forms no part of and is not relevant to the present
proceeding. [Even if Paragraph S.fwere at issue, it expressly does nOt limit the time in which
the misconduct fomting the basis for discipline may occur.]
On June 21, 2010, I adopted and promulgated procedures that would be used in maners

undertaken pursuanltO Paragraph S.b. They establish a clear and fair process by which affected
persons may present evidence

{Q

the RO after receiving a Notice of Possible Action of the

Review Officer (<<NPA") . The Procedures were delivered to the petitioner with a detailed NPA
on August 24. 2010. The Procedures and NPA are attacbed hereto as E:dtibits 4 and 5. The
NPA clearly sd forth the contemplated actioa and the basis for the action.

The NPA also

expressly slated that the petitioner had a specific right and time period in which to provide the

Case 14-3506, Document 35, 11/26/2014, 1380999, Page100 of 103

RO v.ilh a detailed response. including any facts, law or arguments (and exhibitS) deemed
relevant by the petitioner.
Pursuanl to Paragrapb 5.b-iii of the Stipulation and Order e ntered on June 3, 2010.

in the mailer of United States ..... District Council , 90 Civil 5722 (SONY), please be
advised that the Re."jew Officer is considering isswng a veto of the employment and
office of John Daly with the New York District Council ofCarpel'lters and Local Union

608.
The facts and c ircumstances under review involve suspected violations oflhe

ConseD! Decree and the Stipuialion and Order entered in this mat1er; to wit. ( I) in or
aboul January 19.2009. and March )0, 2009, Mr. DaJy knowingly viohued the Job
Referral Rules by dispatching a member or members of a constituent local union to 8 job
at 227 West 27 th Streel; and (2) on August 12,20 la, Mr. Daly ga....e false answerS 1O
ques tions posed by the Review Officer staff regardi.ng certai n even.LS of January 19.2009
and March 30. 2009, and thereafter, which were material 10 an in .... estigation of suspected
violations of the Job Referral Rules. Such conduct would present grounds for a veto
pursuant to Paragraph 5.b.iii
d and e).

ec,

Pursuant to procedures promulgated by the Review Officer to supplement the


record in such matters (enclosed), you may deliver a written submission to this office .... ia
emajJ stating any facts, law or arguments (and appending any exhibits) which might be,
in your view, relevant to consideration of this matter. Said submission must be delivered
by noon on September 3, 2010.
Exhibit 5 attached hereto. 2

Aware of his options and the applicable procedures, Mr. Daly chose 10 waive substanti .... e
par1icipation in Wt process and responded solely by having his attorney (M r. Fahy) send me a
short tener on September ), 2010, which anempted to accoum for
compared it to thai of olhers. The letter also incorrectJy referred

lO

Mr. Daly's conduci and

the prospect of a ....e to as a

"charge and pW'listuneot" and was si lenl in regard to the proposition thai Mr. Daly's office at
Local 608 was also under consideration for veto.
On September 7,2010, J issued lhe following Notice of Veto regarding Mr. Daly:

Paragraph 7 of the Stipulation and Order requires District Council employees and members 10 coopc:ratc
with the Re.... iew Officer. Further, Ihe making of a materially false statement to or obstruction of an
undertllking of 8 court--appointed offk.et may violate 18 U.S.c. 1503.

Case 14-3506, Document 35, 11/26/2014, 1380999, Page101 of 103

Upon the facts presented in the Declaration of William J. 'Flaherty, dated


September J, 2010, incorporated herein by reference, and having considered the leeter of
John Fahy. Esq. , dilled September 3, 20 10, submiTted on behalf of John DaJy, I find ihal
there is reasonable:: cause to believe that beginning on or about January 19,2 009,10 and
including March 30 , 2009, M r. Daly knowingly violated the Job Referral Rules by
dispatching a member o r members of a constituent local union 10 a job at 227 West nih
StIeet; and (2) on August 12,2010, Mr. Daly gave false answers to questions posed by
the Review Officer staff regarding certa in events of January 19, 2009 and March 30,
2009, which were material to an investigation of suspected vlolations of the Job Referral

Rules.
The conduct violated the Consent Decree and Stipulation and Order (entered in
this matter on June 3, 2010) and presems grounds for a veto pursuant to Paragraph 5.h.iii
(c, d and e) of the Sti pulation and Order.
Accordingly, (I ) the employment of John Daly as a business representative o rlhe
District Council and (2) his service as President of Local Union 60& are both hereby
vetoed .
Exhibit 6 (including the Declaration of William J. O'Flaherty) attached hereto .
I do not see a man with Mr. Daly's demonslraled history of violating the Consent Decree
serving as a local union officer (successor president of LocaJ 608 by operation of a vacancy in
the office) and as a business agent of the District Council (appointed during the Forde regime) as
being consistent with the objectives o f the Stipulation and Order; nor do I see such service as
being in the best intCTests o f the District Council and its members. There is substantial evidence
(presented in the O ' Flaherty Declaration o f Seplember 3, 2010, incorporaled by my veto
st.aIernenl, with particularly compelling facts at ~, 7- 16) that Mr. Daly willfully vio lated the Job
Referral Rules and the Consent Decree. His decision to engage in illegal

C(lnctucl bears directly

on any determination of whether he is fit to serve his local union and the District Council.
Prudence requires that he not play 8 role in Union governance or the administration of its
business.

Case 14-3506, Document 35, 11/26/2014, 1380999, Page102 of 103

Prior action by the USC's Supervisor of the District Council is no bar to action by the
Review Officer. 10 October 2009, Frank Spencer stated the ''zero tolerance policy" that business
agents would be terminated if they violated the Job Referral Rules. The stating of such a Union
policy does not act as a bar to action by the Review Officer pursuant to Paragraph S.b., and

certainly does not provide an "immuniry bath" foc .... iolators of the Job Referral Rules whose
breach occurred before October 2009. Mr. Spencer assumed authority in the District Council in
August 2009, after he removed Michael Forde (a confessed racketeer). The Supervisor prudently
stated the positioo of the DistriC1 COWlcil regarding violations of the Job Referral Rules and
reinforced for all concerned what they already knew: that violating the Consent Decree is a very
serious matter.

The Review Officer is independent from the Union and is not bound by the actions of the

Supervisor. See the final " Whereas" clause, Stipulation and Order 81 3. Memorandum o f June 2.
20 10. al4-5. Further, considering the objectives of !.he Slipwat.ion and Order. my responsibilities.
and thai Mr. Daly violaled an order ofmis Coun and lied 10 a courtappoinled officer. I consider
vela of his employment and office pursuant 10 Paragraph 5.b.iii !.he appropriate response and in

the bes1 intereSls of the District Council.

The procedures established by this office for Paragraph S,b proceedings are appropriate
in scope and effect and insure fundamental rairness for affected parties. A petitioner such as Mr.
Daly who has knowingly waived the rights and benefits afforded by the RO' s procedures should

not be burdening the Court with spurious argumenlS about procedural infirmities and post facto
attempts to litigate the underlying maner.

Case 14-3506, Document 35, 11/26/2014, 1380999, Page103 of 103

"

I
For all of the fo regoing reasons, as well as tbose stated in my accompanying
McmoraJ'ldum of

Law, the well-wnsidered and procedurally sound veto at issue should be

affirmed and the petition fo r review dismissed

~Ar~'i

Dated: While Plains. New York


October 26 , 2010

Dennis M. Walsh