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UNITED STATES DISTRICT COURT


SOUTHERN DISTRICT OF NEW YORK
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UNITED STATES OF AMERICA,

Petitioner,

v.

DISTRICT COUNCIL, et al.,

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90-cv-5722 (RMB)

Respondents.
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New York, N.Y.


April 18, 2016
9:30 a.m.

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Before:
HON. RICHARD M. BERMAN
District Judge

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APPEARANCES

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PREET BHARARA
United States Attorney for the
Southern District of New York
BY: BENJAMIN H. TORRANCE, ESQ.
Assistant United States Attorney

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GLEN G. MCGORTY, ESQ.


Review Officer
Crowell & Moring LLP
SPIVAK LIPTON LLP
Attorneys for Defendant District Council
BY: JAMES M. MURPHY, ESQ.
KAUFF McGUIRE & MARGOLIS LLP
Attorneys for Defendant District Council Benefit Funds
BY: RAYMOND G. McGUIRE, ESQ.
ELIZABETH O'LEARY, ESQ.

SOUTHERN DISTRICT REPORTERS, P.C.

(212) 805-0300

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APPEARANCES (Cont'd)

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HOLLAND & KNIGHT LLP


Attorneys for Intervenor Building Contractors Association
BY: LOREN L. FORREST, JR., ESQ.
ZUCKERMAN SPAEDER LLP
Attorneys for N.Y.C. District Council of N.Y.C. and
Vicinity of the United Brotherhood of Carpenters
BY: BARBARA S. JONES, ESQ.
THERESA J. LEE, ESQ.

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(In open court)

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THE COURT:

I have a few issues that I wanted to go

over with you, and if you have any I'm happy to entertain them.

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The first is -- and I think I may have the answer;

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I've been handed a stipulation and order regarding extension of

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the independent monitor's term.

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January 20, just to go through some of the history, the parties

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indicated that they were going to draft a new stipulation

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extending Mr. McGorty's term.

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comments and suggestions.

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forth.

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had an agreed draft.

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to go before the delegate body.

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it went before the delegate body?

At our last conference on

They did that, and I had some

There was some drafting back and

And then, at least as between myself and counsel, we


And then I understood that this was going
Do I understand from this that

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MS. JONES:

Yes, it did, your Honor, and was approved.

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THE COURT:

So this was in the form of the last draft

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that we exchanged, I suppose?

Right?

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MS. LEE:

Yes, your Honor.

THE COURT:

No further changes by the delegate party.

MS. JONES:

No.

THE COURT:

OK.

Related to that and related to some

of the other topics that I want to discuss, it's my

understanding that one of the principal, or a principal

objective of Mr. McGorty's new term is going to be to establish

or to describe benchmarks on the way toward independence or

improvement or whatever the correct term, phraseology should

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be.

So I wanted to suggest to you today that -- and these are

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two of the other topics that I want to deal with -- that

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included in these benchmarks -- I don't know, actually I don't

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think that this is currently contemplated, but I would like to

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see returns on investment of benefit funds.

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that that is hugely important, talking about the health of

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these unions quite apart from issues of, you know, if anybody

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is getting arrested anymore or not.

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focus, all of us, on how well the union is doing and in

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particular financially.

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correspondence or memo, understanding, it just struck me as a

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layperson, not as a financial expert, that the results of the

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investments have not been as spectacular -- well, that's not

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the right way to phrase it -- have been, seemed to me anyway,

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sub par.

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about the "sub par" in a moment.

It seems to me

It seems to me we ought to

I think I mentioned to you in either

I am now moving into another issue.

And I'll talk

But that is something that

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I'm proposing that, Mr. McGorty, you consider when determining

benchmarks, the health of the District Council.

is something that you could and, I think, should consider in

your evaluation.

MR. McGORTY:

I suppose that

Your Honor, just to address two points.

The first is, on the issue of benchmarks, I do think it's

important, as I said at our last conference, to come up with

some concrete goals to really fairly establish whether or not

either the funds or the District Council is ready at some point

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in the future to be self-monitored under the consent order,

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which is what your Honor suggested.

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THE COURT:

Hold that for a minute.

Yes.

I'm going

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to come to what I have in mind.

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personally are necessarily the right person to evaluate the

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performance financially of these various --

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MR. McGORTY:

Right.

I don't expect that you

No, but what I'm suggesting,

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your Honor, is that I do think certainly there is a category of

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benchmarks appropriate for the District Council.

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conversations with counsel for the benefit funds, we have not

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progressed as far along in an idea of a separate list of

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criteria for moving past the monitorship.

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well on their way to establishing new leadership in the form of

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a new executive director.

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people that may be involved in that decision-making process.

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There are other separate, independent steps that I think the

In

I think they are

I understand there are several

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funds are undertaking, separate from the council, that would

make me satisfied they're on the right road.

Regarding the financial success of the fund's

investments, I just point out to your Honor that in the current

form of the stip and order, at least the 2014 order and I

believe it's consistent with your -- before your Honor, an

evaluation of the investments under the funds has been

specifically excepted from my responsibilities.

I am unwilling to undertake something broader, but just so your

I'm not saying

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Honor is aware, it's my understanding that that's what the

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parties had previously, in 2014 and earlier, agreed to.

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Perhaps there is some evaluation that I could contribute to or

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make sure that someone is properly evaluating not necessarily

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the success of the investments -- and I'm sure counsel will

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address this for the funds -- but at least that the leadership

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of the funds is making sure that they are hiring and utilizing

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qualified, appropriate investment advisors, which I believe

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they may be doing regardless of the success of the funds,

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particularly investments your Honor has seen.

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several layers of issues I just wanted to outline.

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THE COURT:

So there are

There is also the fundamental point as to

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whether or not the members of the union, whether the funds are

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healthy, as it were, and at some point in time we had

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discussions and it was unclear whether the funds were going to

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be adequate to the task which they have.

So that certainly is

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something that, without delving into the return on investment

as it were, people ought to know about: how does this union do

compared to the S&P or other unions or whatever.

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I don't suggest that that is an undertaking that you


do.

MR. McGORTY:

THE COURT:

MR. McGORTY:

THE COURT:

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I see, your Honor.


We discussed that in the past.
Yes.
I'm going to come to that again about --

do you have another point?

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MR. McGORTY:

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THE COURT:

OK.

All right.

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Mr. McGorty's extension.

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I will sign this order.

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No, that was it, your Honor.


So the first item is

Everybody is in agreement that -- and


That's the number one issue.

Number two, it was also discussed at the January 20,

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2016 meeting that we had, in particular we had discussions

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about the returns on investment for the pension fund, I think

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the record will reflect compared to benchmarks, welfare fund,

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etc., etc.

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some sort of audit, independent audit -- these funds are quite

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substantial in amount -- as to how the funds are in fact doing.

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There was some back and forth between the benefit funds and

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counsel, I think, for the funds.

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and somebody wrote back and said, that's too expensive, we'll

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do it ourselves, or something like that.

And I had suggested at the time that somebody do

I had suggested independent,

And then I got a

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whole flurry of evaluations about the funds.

didn't think they were satisfactory.

But frankly I

And I didn't and don't understand still why some sort

of independent review can't and shouldn't be done -- this is

done all the time in areas where there are substantial amounts

of money which are held for the benefit of others -- why there

can't be some review.

discuss today.

internal review of how well funds are doing gets to the point.

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So that's my second topic I wanted to

I don't think, personally I don't think an

MR. McGUIRE:

Raymond McGuire, your Honor, for the

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benefit funds.

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I told you that I would bring your suggestion to the attention

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of the trustees, that, as you noted, this is not unusual when

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you have a particular organization entrusted with the fiduciary

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obligation of managing large amounts of money.

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this in context, we are now up to $2.78 billion in the pension

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fund, and the welfare fund is up to $446 million.

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You might remember at that January meeting that

Just to put

As far as the health of the funds, your Honor, I think


I can reassure you --

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THE COURT:

I don't want that kind of reassurance.

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want to know specifically if the returns that these funds are

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making can be improved by perhaps -- and I'm not suggesting

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who's doing the investing now -- I want to know where they

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stand vis-a-vis, you know, how other comparable funds are

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doing.

And it struck me and it strikes me that it is a lot of


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money.

between you and myself actually from "We don't know if the

funds are going to be available to meet their obligations" to

"Now they're healthy."

like to know if there are, independently, whether somebody has

good suggestions that they could be invested better than they

are or some other way so that the membership might do better.

That's all.

In a short period of time we went from discussions

MR. McGUIRE:

That's too generic.

I really would

The investment advisor, Arthur

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Gallagher, fiduciary, has made available to us and constantly

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makes available to us large amounts of material where the

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performance of each manager that Gallagher is overseeing is

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measured according to its peer group and according to long-term

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measures of its effectiveness.

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THE COURT:

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MR. McGUIRE:

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I know that.

I've seen --

We're looking at how well Gallagher is

doing.
THE COURT:

That's exactly my point.

Gallagher has

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been in this position for a long time.

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I'm not suggesting any negative comment.

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if somebody is looking at how they are performing, it's usually

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not as helpful as if someone outside the case looks.

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fully aware and I get some of the copies from Gallagher saying,

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you know, yes, everything is great.

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I don't know Gallagher.


I'm suggesting that

So I'm

By the way, relatedly, I realize, and I don't know if


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this is common or not, but there are so many fund managers.

That's another issue that I wonder if someone shouldn't take a

look at.

consequently so much expense for outside managers and

investors, if there couldn't be some savings there or

improvement that would benefit the membership.

Somebody other than Gallagher.

MR. McGUIRE:

I don't understand why there are so many managers and

your Honor.

OK.

That's all.

Gallagher is doing extremely well,

And the pension fund is doing extremely well --

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not by Gallagher's evaluation.

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Gallagher's evaluation.

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can measure Gallagher against.

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not only do we know how each fund manager is doing -- again,

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not by its own characterization of its results, but by the

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policy index we use to measure it against.

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performance against other Taft-Hartley plans.

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measure we're doing extremely well.

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THE COURT:

We're not talking of

There are objective metrics that we

Yes.

And we do it every quarter.

So

We compare our
And by any

So the last time -- and here's what

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first raised my attention.

On January 20, you reported that

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the benefit funds explained that for the year ending September

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30, 2015, the return on investment for the pension fund was a

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loss of 1.79 percent as compared to a .6 percent loss for the

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S&P for the same period and a .35 percent loss for the fund's

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benchmark.

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discussion with you about how well the funds are doing today,

So I really don't, Mr. McGuire, want to have a

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because I'm not competent to evaluate that.

that, in a situation when there is so much money and when the

same manager, Gallagher, has been the manager for a long period

of time, and -- that's just a snapshot.

of a trend that is.

percent, which is significantly more than the S&P is losing for

the same period.

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I'm just saying

I don't know how much

But -- and so much money it's losing, 1.79

And by the way, I don't know why there's so much


resistance to this idea.

This is a union and counsel has -- I

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don't mean this as a criticism -- but it has dozens upon dozens

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upon dozens of advisors and dozens and dozens and dozens of

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counsel, lawyers employed.

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independently -- it seems to me, I would have thought,

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everybody would jump up and say, well, that is a good idea,

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let's see, if we are doing so well, let's see some independent

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person tell us that.

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there's so much resistance.

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I'm just asking whether somebody

MR. McGUIRE:

I don't know why it's a big shock or why

All I can do is represent to you, your

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Honor, the consensus of the trustees, that they think it's

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neither necessary nor appropriate nor prudent.

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THE COURT:

Well, who cares, to be perfectly honest

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with you.

Necessary, appropriate, and prudent, I, without

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knowing more, I would disagree.

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been in business myself in the private sector for a long period

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of my career.

It seems to me -- and I've

This kind of thing is done all the time.


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called an audit.

to see if in fact they're right.

who have a vested interest in the performance, in saying things

are hunky dory and healthy, doing well, don't think it's

necessary, etc., etc., it's very common to have that reaction.

But from my point of view it's not very comforting.

And it's an audit by an outside independent

MR. McGUIRE:

It's not uncommon for people

I could revisit it with the trustees,

your Honor, but I'm fairly confident they will again make the

same decision.

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THE COURT:

Why do they think that it's

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unnecessary?

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do, costs a hundred thousand dollars and a waste of money.

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I don't know if it's too expensive or, you know, we're doing so

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well, or why.

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Yes.

And why?

You tell me an audit is too expensive to

MR. McGUIRE:

So

Well, this kind of audit, by another

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firm, of your investment advisor, in fact is highly uncommon in

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that part of the world.

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THE COURT:

Oh, that's nonsense.

I don't mean to be

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rude.

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and all the time are outside persons called in to -- it's not

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necessarily an evaluation to see if there's wrongdoing.

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just an evaluation to see if this money could be better

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invested.

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But all the time, financial performance is monitored,

It's

It's not a big deal.


MR. McGUIRE:

I think I'm simply going to get into an

argument with the Court, when I'm not even talking about my own
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personal views.

of the trustee.

All I can do is represent to you the decision

THE COURT:

So maybe we should have the trustees come

here and maybe I'll understand it better, why they are so dug

in about something that I would have thought makes just common

sense.

MR. McGUIRE:

I think it raises also a larger point

that maybe you've noticed we've discussed not directly but in

the context of describing the authority of the independent

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monitor: the funds have always taken the position that they are

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not properly subject to the consent decree.

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THE COURT:

Here you are.

You've been here since I've

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been here.

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status you're here, but here you are.

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So maybe you're here as, I don't know in what

MR. McGUIRE:

Voluntarily according -- the trustees

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believe they have voluntarily agreed to come under the

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stipulation and order, but that they were not parties to the

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original consent decree, and they have never been accused of

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criminal wrongdoing or any wrongdoing for that matter.

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THE COURT:

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too narrow a focus.

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wrongdoing.

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criminal wrongdoing.

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investments.

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That's exactly my point.

You're taking

You're concerned about criminal

I'm certain -- I'm hopeful that there's no


I'm just talking about the health of the

That's all.

MR. McGUIRE:

The trustees are fiduciaries with

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prescribed obligations and responsibilities under ERISA.

are routinely audited by the Department of Labor.

the constant oversight of the Department of Labor.

frankly, the trustees don't believe there is a role for the

Court to perform here.

THE COURT:

We

We are under
And

Then, if that's right, I would like a

letter from the trustees that say that they refuse, for the

reasons stated, they refuse to participate in any kind of

independent evaluation.

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MR. McGUIRE:

We will certainly bring that up, your

Honor, at the next trustee meeting.

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THE COURT:

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MR. McGUIRE:

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THE COURT:

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When is that?
End of May, your Honor.
So you could certainly bring it up before

the end of May, right?

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MR. McGUIRE:

Yes.

We do have special meetings.

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do have telephonic meetings.

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think we need to have a special meeting.

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We

A matter of this gravity, I would

I also should add, your Honor, there is not unanimity

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among the trustees on this.

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aspects of this issue, have different views than the employer

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trustees.

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THE COURT:

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MR. TORRANCE:

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The union trustees, on some

Do you have any thoughts, Mr. Torrance?


No.

I will just add that the

government's focus has not really been on the results as much


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as the process.

is that it is the federal government's policy to let unions and

Taft-Hartley funds run themselves generally, absent something

extraordinary like evidence of criminality.

And part of that is a couple of reasons.

THE COURT:

One

If they're running themselves, we've been

spending a lot of time around here in meetings on a regular

basis for years suggesting that we're not --

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MR. TORRANCE:

Understood.

And so I do think bad

performance in a certain asset can be an indicator of something

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wrong going on, something criminal going on.

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that the federal government doesn't want to find itself in the

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position of surveying the world of labor unions and their funds

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and saying, well, that's not really a best practice and so

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we're going to step in.

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I think, though,

So it is a gray area in a sense that it can be

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evidence of criminality.

But as we suggested in our latest

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letter to your Honor, having not seen, over the course of 26

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years of this case, any evidence that there is RICO-covered

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wrongdoing in the investment decisions by these funds, that is

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not an area we have stepped into.

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to make sure that the funds are running themselves well.

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do, as the Court knows, disagree with Mr. McGuire about the

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voluntary nature of their participation.

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best way of assuring that the funds are complying with the law

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and are performing in the interests of the members is to make

We do think it's appropriate


We

But in our view the

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sure that the process is going well, that they're choosing

their investment advisors appropriately, that they are choosing

well- credentialed and respected investment advisors.

believe Mr. McGorty and his predecessor's court-appointed

officers have been aware of that issue and have been ensuring

that that process is a regular and lawful one.

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THE COURT:

OK.

And I

But wouldn't part of choosing people

well be that those people are successful?


MR. TORRANCE:

I do think that there is -- but I guess

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in my mind there is an analogy like if I personally am choosing

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between, say, Fidelity and Vanguard, if you look at one quarter

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or even one year, well, one of them may outperform the other.

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But that's not really a fair measure of saying, well, one is

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really not able or competent to be managing my personal money.

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It just happens that they're doing particularly well.

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that's something that's going well outside the range --

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THE COURT:

If

You look at the return on investment and

also at the expense of the financial advisor.


MR. TORRANCE:

Right.

I think that a prudent investor

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would look at all of those things.

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the oversight that the monitor and his predecessor have given

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and the oversight of the Department of Labor, we have not

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chosen to invest our resources in looking further into the

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performance of the funds.

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THE COURT:

But I do think that given

So to your knowledge, Mr. McGuire, has the

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Department of Labor done a recent audit of the benefit funds?

MS. O'LEARY:

There was a pension fund audit, your

Honor, done last year that ended with no action, and the

Department of Labor has just commenced a welfare fund audit.

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THE COURT:

What did they say about the issues I'm

raising?

MS. O'LEARY:

They just asked for a number of

documents and then they just said -- they don't tell you

specifically what their focus is.

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THE COURT:

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MR. McGUIRE:

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Your Honor, DOL ordinarily does not

evaluate your performance returns.

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That's not really what I have in mind.

THE COURT:

That's my point.

That is exactly my

point.
MR. McGUIRE:

But the law has entrusted that

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responsibility to an equal number of union trustees and

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management trustees.

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that you have to ensure that you secure expert advice, which

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we've done, and you have to have widely diversified

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investments, because --

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THE COURT:

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investment you get.

The only guidance provided in the law is

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MR. McGUIRE:

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THE COURT:

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MR. McGUIRE:

And they don't care what return on

They don't.
They don't.
No.

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THE COURT:

Really.

MR. McGUIRE:

That's astonishing.

Because in one year we could lose 10

percent, the next year we could be up 40 percent.

the ten-year average.

in the ten-year period.

We look at

THE COURT:

And we are outperforming every measure

Yes.

Well, so, all right.

I think the

record is clear what I would like to hear from the trustees.

If they refuse to entertain this suggestion or thought, I would

like them to say that in writing and explain why.

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MR. McGUIRE:

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THE COURT:

OK, your Honor.

We will do that.

This is, sort of, not a similar issue but

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it's an issue that is a little bit sensitive.

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sound critical.

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up in my evaluation particularly of the funds and these various

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reports that you all have been sending me about the funds, that

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there, to me -- and again as a layperson -- it looked like an

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astonishing number of financial advisors are -- this money is

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divvied up among a phenomenal -- what I thought was a large

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number of financial advisors.

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have a little trouble understanding why there would be so many

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people involved.

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it's done.

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that, are there too many or would it make more sense if there

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were fewer people.

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I don't want to

Over the course of the years, and it cropped

And I didn't quite understand,

Maybe there has to be.

It was surprising to me.

Maybe that's the way

So that was an issue

So that's an issue, relatedly.

And similarly -- and again, I don't mean this in a


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negative way -- but I remember last year I asked for and I

received a listing of counsel for the District Council, outside

counsel.

that's the wrong word to use, but a whole lot of lawyers

involved also.

lawyers.

who are counsel for the District Council.

another issue that I wanted to raise -- and not to have

answered today.

And there was a rather huge, I thought huge, maybe

I wondered, did there need to be so many

There were dozens and dozens and dozens of lawyers


And so that is

I don't think you're going to answer it.

But

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maybe that is something that, Mr. McGorty, you could look into

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too.

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consultants and -- well, outside consultants.

It's a rationalization of the process of outside

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Anybody -- no.

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Bad way to start on Monday, right.

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OK?

I don't mean to --

these are issues that seem to crop up.


The other issue on my mind was the Cement League and

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the Wall-Ceiling matters.

So first as to the Cement League,

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you are all aware that on February 12, 2016, the NLRB affirmed

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the ruling of the ALJ, Mr. Raymond Green, and found that the

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full mobility provisions imposed by the District Council in its

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collective bargaining agreement with the Cement League

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impermissibly encouraged union membership and consequently

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violated the National Labor Relations Act.

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an understanding of where that stands.

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appealed, I think, to the Second Circuit.

So I wanted to get

I know that's been


I don't think

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there's been a briefing schedule yet.

the briefing schedule is, what is the implication on a

practical level for -- well, in particular for that contract?

And what, as a practical matter, has happened as a result of

that NLRB decision?

not a stay, exactly how does that work?

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8
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MR. MURPHY:

But not so much as where

Is there a stay in place?

Or if there is

James M. Murphy, Spivak Lipton, for the

District Council.
Your Honor, you are correct; there has been a joint

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appeal, a joint petition by the Cement League and the District

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Council to the Second Circuit.

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its own petition to enforce its order.

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briefing schedule where the initial petitioners, the Cement

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League and the District Council's briefs are due in June.

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the District Council, besides my firm working on it, will be

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represented by Bredhoff & Kaiser in D.C., Andy Roth, who is

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also representing the District Council in the Wall-Ceiling

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arbitration appeal.

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argument for that is tomorrow.

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THE COURT:

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MR. MURPHY:

The NLRB has filed a petition,


There was a preliminary

And

The oral argument, by the way, oral

Tomorrow.
Yes.

And the Cement League right now is

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being represented by the Proskauer Rose firm, so we're working

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together on that.

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The implications on just a day-to-day level --

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THE COURT:

First on the stay, what is --

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MR. MURPHY:

There is no stay, but there's also no

enforcement.

Their status quo has been maintained.

And in

fact the District Council and the Cement League negotiated a

new agreement that goes through June 30th of 2019.

the other agreements, it maintains the same full mobility,

exact same language as the Court reviewed and approved back in

October of 2013.

agreements have a provision in them that if something happens

to full mobility, the contract, its terms and conditions will

Like all

And all those collective bargaining

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essentially be abrogated and the parties will roll back to

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2011, which is disastrous.

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THE COURT:

That's exactly the point I'm raising.

I'm

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aware of that provision, and in the Cement League case it

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happened.

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maintained.

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I don't know.

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a ruling, as it has here, which declares that the full mobility

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provision is invalid, doesn't that have any force and effect on

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its own?

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So you're saying that the status quo has been


As a legal matter doesn't there need to be a stay?
You know this better than I.

MR. MURPHY:

No.

If the NLRB issues

The parties can -- which we have

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done -- can disregard that and in fact seek to have it not

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enforced by a court order with the circuit court of appeals.

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And that's what we've done.

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Second Circuit rules on it, either denying enforcement or

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granting enforcement, it's just simply out there as an

And so until such time as the

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administrative agency decision and order that we're taking and

the agency itself takes by statute, that it has no effect until

such circuit court enforcement.

THE COURT:

And so as a practical matter, you say you

have actually extended the agreement with the provision that

the NLRB has said is invalid.

MR. MURPHY:

That's correct.

We negotiated a

successor collective bargaining agreement that has a number of

what we believe -- and District Council working in conjunction

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with the international union, the UBC, a number of developers,

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general contractors, as well as the Cement League contractor

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members themselves, have developed what we think is a very good

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collective bargaining agreement that will enable those Cement

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League contractor members to recapture a lot of the foundation

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and high-rise concrete market in the city, more work for

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District Council members and those others that we represent.

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THE COURT:

So then as a practical matter, depending

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on the outcome of the Court of Appeals, is that -- so nobody

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does anything until that time, so to speak, legally?

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MR. MURPHY:

Yes, that's correct, your Honor.

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THE COURT:

You just keep going along under the

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existing agreement.

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MR. MURPHY:

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THE COURT:

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Right.
OK.

And then, turning to Wall-Ceiling, as

you point out, that matter, which is an appeal from a decision


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of mine, is being argued tomorrow.

mobility has also been raised in that appeal.

you've answered my question; you're saying -- well, what are

you saying about it?

MR. MURPHY:

But the issue of full


And I think

That the NLRB's decision -The Wall-Ceiling case is not one involved

in the arbitration award.

THE COURT:

MR. MURPHY:

THE COURT:

Yes, I know.

I know what it involved.

Yes.
But the issue of full mobility is central

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to the relationship between the District Council and

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Wall-Ceiling, no?

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MR. MURPHY:

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THE COURT:

That's correct, your Honor.


So what is the impact if any -- I think

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you answered it perhaps in talking about Cement League -- but

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what is the impact -- one of the parties has raised it on

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appeal, obviously the NLRB's decision, are you taking the

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position that that argument is -- well, that's what I'm asking

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you.

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MR. MURPHY:

We've taken the position that that

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argument is premature and that the NLRB decision and order will

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be under review at a later time in front of the Second Circuit.

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The Wall-Ceiling case is somewhat more narrowly focused on the

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two-person-job provision, although the two-person-job provision

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still has the same one-to-one matching as the other provisions

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that the NLRB found were problematic.

So that we're just

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forging ahead with that, and if the Second Circuit would refuse

to affirm your decision and instead enforce the arbitrator's

award we would deal with that at that particular time.

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5

We see that as more focused on the two-person-job


provision.

THE COURT:

MR. MURPHY:

I know.
We're also in negotiations -- the

Wall-Ceiling collective bargaining agreement doesn't expire

until June 30th of 2017.

But a number of other contracts in

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which the two-person-job provision involves the one-to-one

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matching, both play a very important role, are expiring this

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June 30th.

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Building Contractors Association, the Floor Coverers

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Association.

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not implicated with the full mobility.

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that contempt proceeding and that controversy going back to the

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2000s under the old regime at the District Council.

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are two very important collective bargaining agreements.

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Building Contractors Association has probably 120

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subcontractors.

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happens there will be very important as far as the

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Wall-Ceiling, which is the largest multi-employer association,

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which, as I said, expires a year later in June of 2017.

And we're in negotiations with them.

That's the

And there are some other associations that are


They were never part of

A lot of them do interior work.

But those
The

And what

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The District Council's view is that if the one-to-one

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matching, and I think it's the -- I don't want to put words in


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your Honor's mouth -- but it seems to be the view of the Court

that if that goes, that the full mobility goes, and that would

be a disaster both for the District Council as well as for the

multiple-employer associations and the various general

contractors and subcontractors that they represent.

THE COURT:

Those agreements have a similar provision

that if for any reason those provisions were determined to be

invalid, the whole agreement --

MR. MURPHY:

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THE COURT:

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MR. MURPHY:

Every single one of them, yes.


-- has that same -Yes.

Every single one of them has that.

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Rolled back to June 30th of 2011.

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Judge Haight's 67/33 hiring ratio, in which the contractors

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then lose full mobility, and for them that would be a disaster.

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But, also, the raises of the District Council for wages as well

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as increases in benefit fund contributions would roll back to a

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long time ago, June 30th of 2011.

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THE COURT:

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So that was what was on my mind.

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OK.

It also rolls back into

I get it.
Any, Mr. McGorty, do

you have -- I should say congratulations to you.

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MR. McGORTY:

Thank you, your Honor, for that one of

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many words that comes to mind.

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I just would point out to your Honor that the locals

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will be holding elections for delegates coming up in the next

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few months and we've already begun the process of reviewing and
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monitoring those applications and the systems to make sure

they're above board.

THE COURT:

MR. McGORTY:

So by now you're a veteran of this.


It seems like it's gone quite quickly,

your Honor.

But I can candidly say, your Honor, I feel very

comfortable with the systems that are in place at both the

funds and the District Council, and I think we'll be able to

move the ball, I think, to get everyone towards those

benchmarks and those goals, now that I think I've sort of

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gotten just a fraction of the experience of my predecessor but

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I think enough to actually be able to be on top of the everyday

12

matters and now move ahead towards working in partnership with

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the leadership of the council in particular and the funds to

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help them meet their goals.

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THE COURT:

I did have a question I forgot to raise.

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So there are positions at the council of inspector general or

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something like that?

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MR. McGORTY:

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THE COURT:

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21
22

Yes, your Honor.


And is there also an in-house general

counsel or legal staff?


MR. McGORTY:
for the funds.

Mr. Murphy serves as the general counsel

Obviously the Zuckerman Spaeder --

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MS. JONES:

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MR. McGORTY:

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apologize.

For the District Council.


For the District Council, I'm sorry.

For the District Council.


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THE COURT:

I'm just trying to figure out the

structure as best I remembered of the internal employees.

There is an inspector general.

MR. McGORTY:

There is an inspector general's office.

There is a deputy inspector general.

There is also a chief

compliance officer.

over the past several years imposed by my predecessors with

respect to the compliance managers of the funds.

serves as a general counsel of the funds -- I'm sorry, I keep

Those are all relatively new positions

Mr. Murphy

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saying that -- on the District Council.

11

Zuckerman Spaeder firm, Judge Jones and Theresa Lee.

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13

THE COURT:

I know that.

They have utilized the

And I think they do a

fabulous job.

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MR. McGORTY:

15

THE COURT:

Right.
I am just wondering, I'm trying to figure

16

out the structure internally.

17

What does the inspector general do, in relation to, say, what

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you do or what outside counsel does?

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MR. McGORTY:

I know there was some addition.

The inspector general, I believe, will

20

eventually absorb the responsibilities that the independent

21

monitor has with respect to general investigations.

22

made an effort in this past year to, when I receive requests

23

for matters to be investigated, to hand them off and often work

24

in concert with the inspector general.

25

job site compliance issues, investigating employer issues with

I have

They are investigating

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respect to -- and also with respect to the working papers for

the businesses' representatives, shop stewards -- everyone who

basically works on behalf of the fund -- I'm sorry, the

union -- out in the field.

investigators that are out in the field.

with them.

been made to the inspector general, and I try and hand them off

as best as possible.

So they have a team of


We work in concert

I get referrals, some of which directly have always

Since your Honor raised it, I will say that one of the

10

main benchmarks, I think, for the District Council's benefit

11

will be to make sure that that office is as efficient and as

12

successful as possible.

13

currently undergoing a review of the IG's processes and

14

procedures, working alongside the members of that office, to

15

make sure that they're doing everything that can be done to do

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what they do efficiently.

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18

THE COURT:

I think that would be a benchmark that I

would be interested in.

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MR. McGORTY:

20

THE COURT:

21
22

To that end, our office, my office, is

Sure.
And the compliance office, is that

different?
MR. McGORTY:

The chief compliance officer works in

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concert with the IG, but my involvement with the chief

24

compliance officer, Joshua Leicht, has revolved specifically

25

about the implementation of policies generally in the council,


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accounting policies, personnel policies.

We've worked well, I

think, this past year.

initiatives undertaken by the District Council to revise or

revamp some of their longstanding policies -- not longstanding

but preexisting policies to my arriving at the union.

again, I think also a crucial role going forward.

He has been involved in several

THE COURT:

Great.

That's really it on my part.

No.

So

Thanks.
Anybody else?

Nice to see you all.

10

MS. JONES:

Thank you.

11

THE COURT:

I'll get this out in the next half hour.

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MR. TORRANCE:

13

MR. MURPHY:

14

Thank you, your Honor.


Thank you.
o0o

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