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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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UNITED STATES OF AMERICA,

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Plaintiff,
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v.

90 Cv. 5722 (RMB)

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DISTRICT COUNCIL OF NEW YORK
CITY, et al.,

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Defendants.
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October 17, 2016
10:10 a.m.

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Before:
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HON. RICHARD M. BERMAN

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District Judge

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APPEARANCES

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PREET BHARARA
United States Attorney for the
Southern District of New York
BY: TARA LaMORTE
Assistant United States Attorney

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CROWELL & MORING, LLP
BY: GLEN G. McGORTY
Review Officer
- and BY: DANIEL E. VINISH

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BRACEWELL, LLP
Attorneys for NYC & Vicinity District Council
BY: BARBARA S. JONES
THERESA J. LEE

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

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APPEARANCES
(continued)

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WILMER CUTLER PICKERING HALE & DORR, LLP
Attorneys for District Council Fringe Benefit Funds
BY: BOYD M. JOHNSON III
- and KAUFF McGUIRE & MARGOLIS LLP
Attorneys for District Council Fringe Benefit Funds
BY: RAYMOND G. McGUIRE

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SPIVAK LIPTON LLP
Attorneys for District Council
BY: GILLIAN COSTELLO

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HOLLAND & KNIGHT
Attorneys for Building Contractors Association
BY: LOREN L. FORREST, JR.
FREDERICK D. BRAID

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McELROY, DEUTSCH, MULVANEY & CARPENTER, LLP
Attornyes for Wall-Ceiling Association
BY: MARK A. ROSEN

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THE COURT:

So, nice to see you all.

I put together a

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little agenda, which is based on Mr. McGorty's report, in part,

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and issues that I am aware of from that report and also issues

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that have been pending here for some time.

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So I am going to ask Ms. Murray to hand them out.

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There is not enough for everybody, so if you could share maybe

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with the person next to you.

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So you will see quickly that I want to start with the
benefit funds.

We have some open issues there.

And then we

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will go to the District Council, more centered on District

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Council.

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So the first issue with respect to the benefit

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funds -- well, first, we have some new officers from the

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benefit funds, is that right?

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MR. McGORTY:

Yes, your Honor, they are here.

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introduce them.

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new CFO, Bert Lesniewski --

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THE COURT:

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MR. STEWART:

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THE COURT:

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MR. STEWART:

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THE COURT:

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MR. LESNIEWSKI:

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MR. McGORTY:

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Are they here?
I will

The new executive director, David Stewart; the

Hold on a second.
Right here.
When you say "new," how new are you?
I began on June 20.
Oh, really new.
Likewise.

And new chief compliance officer is

Allan Bahn, right there.

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THE COURT:

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MR. BAHN:

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THE COURT:

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September 1.
Okay.

Please be seated.

That's a pretty

high-level shift, one might say.

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And when did you start?

MR. McGORTY:

I can address a little bit that and

obviously counsel for the funds is here.

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The prior executive director, your Honor, left, I

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believe it was in April of 2015.

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director put in place within a few months after that date, your

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Honor, Regina Reardon, who had been here before and I reference

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in our report.

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the benefit funds made great efforts to find the right person

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for the job to be the new executive director.

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they have actually restructured the leadership, and that's why

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there is both an executive director and now a chief financial

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officer, a CFO.

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So there was an interim

During the course of the year that followed,

THE COURT:

In doing so,

There are so many employees and so many

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management employees, and we are only on the benefit funds,

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now.

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have trouble remembering who all is doing what.

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We haven't even gotten to the District Council.

MR. McGORTY:

Sure.

So I

Counsel for the funds may be able

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to address the day-to-day responsibilities; but, so you know

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how it is structured --

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THE COURT:

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MR. McGORTY:

I am trying to figure out.
So Mr. Stewart is the new executive

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director, taking over that position from Regina Reardon, who

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had been the interim for the prior year.

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The new position is a chief financial officer, which

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fits well with Mr. Lesniewski's experience.

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chief financial officer.

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THE COURT:

He is the new

So there was never a chief financial

officer before?
MR. McGORTY:

They can address this better than I can.

My understanding is that they did not break it out into two

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separate positions, and it was a single executive director with

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those responsibilities.

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And the third person is a chief compliance officer,

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which is not a new position, but newly filled.

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RFP put out, and they decided on Mr. Bahn.

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actually all three of the new executives' experience is laid

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out in the last report.

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THE COURT:

Fine.

There was an

His experience and

Anyway, welcome to all of you and

to the new employees in particular.
So I don't know that we will get through this whole

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agenda, but after the welcome, so you will recall -- I know you

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do -- that, back in I think it was January of this year, I

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raised some concerns, having heard or read about the report of

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the benefit funds, having come off of a pretty bad year, in

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fact, there were losses which I had not seen before in my

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tenure as presiding over this case, 2 percent down, as opposed

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to, in happier times, we are used to seeing that funds made

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some return on investment as opposed to losing.

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So, anyway, you will remember that I suggested that it

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might be helpful -- and I certainly thought it would be, and I

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doubly think that today, to have some independent entity or

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person or accountant or whatever come in and take a look.

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I think I remember Mr. McGuire said, Yup, we will get

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right on it, and then there ensued a series of letters back and

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forth from counsel for the benefit funds and also conversations

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in succeeding meetings that were somewhat contradictory.

Some

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of the letters were saying that the funds take the position

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that the court has no jurisdiction in this area, which,

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incidentally, it has been so long since we have been having

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this conversation that I was able to do a little research, so I

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am pretty much up to speed on whether or not I think the court

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has jurisdiction or not.

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But, anyway, fast forward, letters back and forth, I

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think it was Mr. McGuire, through Mr. McGorty, suggested that

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perhaps I meet with the trustees, and they wanted -- the

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suggestion was that we meet in chambers, and I said I would be

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delighted.

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has come up two or three times, and there has never been a

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meeting.

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letter from Mr. McGuire.

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dates and asked if these dates were agreeable or one of them,

In fact, I said it two or three times, because it

The last time it came up was at the suggestion or a
I wrote back and suggested three

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please call Christine Murray and let us know.

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back.

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to hear back today or tomorrow, whenever that endorsement was.

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Never heard back.

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Never heard

I think the last message from me was, well, I would like

So, you know, my door is always open, but there must

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be some reason that the trustees don't want to meet.

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it.

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Mr. McGuire.

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intend to proceed with this issue in some form.

I am happy to meet them, but -- just a minute,
But I am also happy to proceed, because I do

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So, sorry, your turn.

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MR. McGUIRE:

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I am over

Your Honor, the problem has been getting

dates, where Mr. McGorty -THE COURT:

Don't go down that path, Mr. McGuire.

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This issue has been pending since January 2016.

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easily have gotten the president of the United States to come

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up with a meeting, and I don't feel that I have any particular

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inside track.

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gotten, I don't know, you name it, Donald Trump.

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had him here in that period of time.

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What is it, ten months or so?

I could more

We could have
We could have

These are busy people.

So that's an unfortunate -- that is going to be an
unsuccessful path for you to go down.
MR. McGUIRE:

We would like to meet in chambers, your

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Honor, and I believe Mr. McGorty has put together some dates

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where everybody is available next week.

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THE COURT:

So, Mr. McGorty, you will call Christine

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Murray with those dates?

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MR. McGORTY:

I will do that, your Honor, yes.

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THE COURT:

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Just so you know, if there is going to be a meeting --

And we will see if we can accommodate you.

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let's have the meeting and I will explain what people should

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know then, but I am very much up on the issue, and I think more

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than ever that some hard look needs to be taken, and that's

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what I will convey to the trustees as well.

I do think we need

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an independent person or entity to do that.

I looked back over

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the record of this case and at one point somebody had some

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objection because another expenditure would cost some money;

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and, as I have been studying over the last weeks, there are so

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many consultants and so many new hires and so many outside

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vendors, that this, which would be, in my estimation, perhaps a

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money-saving or result in a positive financial picture, that

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argument is not the least bit persuasive to me that, you know,

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there be no need to spend the money, as it were.

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So, anyway --

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MR. JOHNSON:

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Sorry, your Honor.

If I may, so I filed

my appearance this week -THE COURT:

Yes, and you are very welcome, Boyd.

to see you.

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MR. JOHNSON:

Nice to see you, Judge.

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-- for the funds.

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I wanted to echo, I think, some of what your Honor

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

Nice

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said.

There are my meetings in the sort time I have been

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engaged, there is a commitment on the part of the trustees of

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the fund, obviously maximizing the returns for the members, and

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to upholding the future obligations.

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meeting, and we appreciate that your Honor's door is open.

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will take advantage of that and obviously work with the monitor

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to get dates as soon as possible.
Great.

There is a desire for a

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THE COURT:

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Moving down the agenda, there is an issue that is

We

Thanks.

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raised in Mr. McGorty's -- is this your third interim report,

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Mr. McGorty?

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MR. McGORTY:

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THE COURT:

Yes, it is, your Honor.
It is raised at page 20, I believe, or

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around there.

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goes over to page 21, it is called "Investigation of the

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Benefit Funds."

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At page 17 -- yes, the bottom of page 20, it

By way of background, Mr. McGorty raised it certainly

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here in his report, and then there was a follow-up

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correspondence both from Mr. McGorty and Mr. McGuire as to this

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issue.

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I will just read it briefly, this is McGorty writing, he says,

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"In the course of the last year, my team conducted an

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investigation of the benefit funds, focusing on the welfare

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fund.

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that is, to Mr. McGorty -- "of the fund's trustee's counsel

So the issue, as included in the third interim report,

The investigation was prompted by a report to me" --

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indicating errors in the administration of this fund," and then

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he writes, "My team, led by Katherine Lemire and her staff at

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Lemire, investigated the matter."

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your Honor shall be in receipt of the report documenting the

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findings of the investigation submitted under seal concurrently

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with this report, I do not provide additional details regarding

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the investigation here."

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does wish to make clear, however, that the trustees of the

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funds were receptive of the investigation's findings and have

Then it goes on to say, "As

And then he goes on to say that he

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since implemented structural and personnel improvements to

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address the issues highlighted in the report.

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So, just for those of you who may not be aware, so

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there is a report.

There are two letters from the fund's

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counsel and from Mr. McGorty under seal, and one being the

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fund's counsel saying that this matter should remain under

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seal.

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how much.

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position is summarized that he thinks further disclosure and

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transparency, he was arguing in favor of that.

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So they couldn't resolve it.

They could not resolve whether it could be disclosed and
And from Mr. McGorty, who I think, fair to say, his

They submitted it to me.

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So I am resolving it in favor of greater disclosure.

I don't

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think sealing is a great way to go so to speak generally.

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That, of course, is too big a statement.

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instances where it is appropriate to seal items, and I have

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until now because the parties asked, but this is not the kind

There are some

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of matter that I think is appropriate to be sealed, so I am

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unsealing the matter.

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aware of it.

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I do think the membership should be

I don't know how serious it is.

One thing that troubled me in studying this issue was

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that the issues were uncovered years ago, several years ago,

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even before Mr. McGorty, who is relatively new, before his

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tenure.

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prepared, it is almost mind boggling about the back and forth

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and the resistance to disclose to people who were studying the

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matter and the inability even to come up with -- this has to do

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about people getting benefits who are not paying for them and

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should be paying for them.

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it was tortuous to read the comments from staff, in this case

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staff at the benefit funds, and reluctance of staff to be

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forthcoming to people who are trying to be helpful and find out

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what was going on, and they just kept going back and forth and

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back and forth.

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If you read the report that the independent person

That's a gross simplification.

But

And, to this minute, by the way -- Mr. McGorty, maybe

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you could help me out -- I don't even know what the number

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involved is.

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$700,000, and then I saw a number 2 to $3 million, and I have

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even seen a number $5 million.

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or three years.

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a railroad, though.

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The first number I saw was in the realm of

So this is over a period of two

Frankly, not to be flip, this is no way to run

So, Mr. McGorty, has a number ever been fixed upon as

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to how much overpayment there was?
MR. McGORTY:

Your Honor, I think if I could just step

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back and address -- sometimes it is important to underscore

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there is a lot of complexity here.

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referenced, it is hard to boil it down simply to any one thing.

As your Honor yourself

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Let me start by saying that, to be very clear, since

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you have aired this issue, to be very clear, this was brought

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to the -- as soon as this matter was brought to the attention

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of the fund's counsel and the fund's trustees, they brought

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this matter to my attention.

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THE COURT:

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I understand.

But before you get to that,

my problem starts long before that.

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MR. McGORTY:

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THE COURT:

Understood.
Because that I don't think happened until

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2015, maybe even later than that, and the thing was kicking

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around for a year or two before that happened.

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What's troublesome is that there weren't procedures in

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place that would generate this conversation.

And I agree with

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you, the trustee's counsel, once they knew about it, they got

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ahold of you, etc., but way too long and too much intransigence

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in between, not wanting to share information, saying that this

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is confidential, I can't let anybody know about it.

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can't just jump over to when it surfaced and we did the right

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thing, because it took way too long to get surfaced and nobody

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seemed to know why that was.

SOUTHERN DISTRICT REPORTERS, P.C.
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So you

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MR. McGORTY:

Right, your Honor.

I was actually just

addressing that one last piece.

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Your Honor, the report lays out what is a very

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complicated issue, that it wasn't simple and was complicated

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internally, and I just wanted to point out, when it did come to

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light to the relevant parties, who have been in front of you,

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your Honor, it was brought to my attention.

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number only because --

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THE COURT:

I do not have a

I hate to keep interrupting, but, frankly,

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I didn't think it was a very complicated matter.

So there

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should be a list of who is entitled to benefits and who isn't,

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and that list should be audited on a regular basis.

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there are overpayments, that should be able to be identified,

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you know, in the computer age, with the push of a button, as it

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were.

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sure, but whether it should have been or needed to have been, I

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have serious doubts.

So if

So it was complicated within the benefit funds, to be

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MR. McGORTY:

Your Honor, that's precisely why we

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looked into the issue and outlined our findings in the report

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which you read.

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utilized the report in taking action to remedy these

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situations, I think, to avoid these problems in the future.

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And I --

We provided that to the trustees.

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THE COURT:

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MR. McGORTY:

They got it when?

They have

In 2015?

Oh, no, no, no, your Honor.

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We have had

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a dialogue with them.

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investigation this summer that we began the prior summer.

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we are in constant contact with counsel for the trustees

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throughout the year.

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they have taken the issues that it raised quite seriously and

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have taken action based upon it.

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I would say we completed our

We have provided the report.

But

I believe

I think, your Honor, one of the issues -- they could

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address this if they want -- but one of the issues they raise,

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which is a reasonable one, is that they are, as far as the

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delaying of any release of the details, is that they are trying

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to work through some recovery efforts to get the money.

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don't believe it bears on disclosure the way they did, however,

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it was well-intended, I think.

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THE COURT:

I'm not suggesting anyone is not

well-intended.

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MR. McGORTY:

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THE COURT:

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I

I know, your Honor.
But this is serious business.

We have

got, what, 3, 4, 5 billion dollars we are talking about.

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MR. McGORTY:

In the funds total, correct.

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As far as your Honor's question about the actual

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dollar amount, one of the other reasons is I believe they are

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actually trying to determine, and it has gone not straight up,

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it has gone back and forth, because it is, believe it or not,

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your Honor, quite technical, the systems, to figure out the

25

dollar amount, well beyond my technical capabilities, but that

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number has not been determined yet is my understanding.

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THE COURT:

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MR. McGORTY:

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Ballpark?
Your Honor, I'm going to have to leave

that to fund's counsel.

I'm not sure of the latest.

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MR. JOHNSON:

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I think we certainly understand the ruling from the

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bench.

As Mr. McGorty --

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THE COURT:

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MR. JOHNSON:

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Boyd Johnson for the funds, your Honor.

You mean today's?
Today, yes.

No, I understand.

Just to echo what was just said, there is work that is

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ongoing, it is almost complete, to make sure we have got the

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number right.

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respect to the unsealing, not for the absence of transparency,

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but just to make sure what is going to be transparent is

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accurate.

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Honor has seen.

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place, we have been working with them in just the short period

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of time we have been retained to make sure that we have got the

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numbers right and the dollars right and obviously could take

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all steps to recover any money through insurance or otherwise.

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What we would ask is some period of delay with

There are recovery efforts that are ongoing, as your
There is a new management team that is in

So that's all we would request at this point, would
be --

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THE COURT:

No, that was in the letter.

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it is not persuasive to me.

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complexities.

Respectfully,

I understand that there are these

I understand that there is new management, but

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there is always new management, you know?

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there are recovery efforts.

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One would have thought -- well, whatever.

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And I understand

Those should be proceeding apace.

I think that really the important issue here is that

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the members need to know about this.

That was Mr. McGorty's

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instinct initially.

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province, so to speak, of the enumerated duties that he has, as

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I am.

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think the right way to go is with transparency.

This is an area particularly within his

And I am not suggesting bad faith whatsoever, but I

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And, you know, when you figure out what the number is

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and what the cause or what the solution is, that's fine, but I

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think it is, what, at least two, three years that this thing

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has been germinating, or whatever the word is, and we are way

14

beyond the time that we should wait any longer.

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big deal, it is not a big amount, I don't think, but I couldn't

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imagine how, like I say, staff -- I don't know if they are

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still there or it is old staff, but staff seem to suggest that

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the number was 700 to $800,000; then the next number that I saw

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was 2 or 3 million; and then I saw, also -- and I don't know I

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have the order in which I saw these things correct -- I saw $5

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million at one time.

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picking numbers out of the sky, and the members should be aware

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of that.

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explanation of why it happened or now that it has happened that

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it won't happen again.

So that just doesn't wash.

It is not a

We can't be

So there may well be a plausible and good enough

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MR. JOHNSON:

We just want to work with the monitor to

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make sure that we clarify the record that the facts are clear,

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and I think this is -- certainly I understand your Honor saying

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it shouldn't be that complicated.

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complicated, and I want to get it right.

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to work with Mr. McGorty.

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THE COURT:

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right approach in any event.

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I understand that it is
So we will continue

I appreciate that, and I think that's the

So there is an issue here, I think item e. is called

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court's jurisdiction/role vis-à-vis the benefit funds.

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you want to, I don't think we need to pursue that today.

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think we should have the meeting with the trustees and see what

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kind of progress gets made there.

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MR. JOHNSON:

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THE COURT:

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Anybody else want to be heard?

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MS. JONES:

No, we agree.

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THE COURT:

You do, too.

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There are some people in the audience today --

Unless
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We agree, your Honor.
Okay.

Good.

All right.
By the way --

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actually, I shouldn't say who look -- I was going to say who

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look like union people, but I don't know that union people have

22

a particular look or not, but there are some -- yes, they are

23

waving.

Do you want to be heard later?

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A VOICE:

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THE COURT:

Yes, please.
So we would need a sign-in sheet.

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So we

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will save some time, as I do, for people who wish to be heard.
Judge Jones, could we move to District Council now?

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Anything else anybody want to say anything else with respect to

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the benefit funds?

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No?

MS. JONES:

Okay.

Your Honor, Ms. Lee is going to handle

parts of this.

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THE COURT:

Okay.

That's fine.

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MS. JONES:

Thank you.

9

THE COURT:

So one issue that we have been talking, we

10

always seem to talk about is the anticorruption mechanisms that

11

were introduced in the current series of collective bargaining

12

agreements.

13

primary one being that there are anticorruption mechanisms, and

14

we want to get -- I want to get the status of where they are in

15

terms of implementation.

16

ground, as I remember, but significant progress seemed to have

17

been made.

18

components, first of all, identify which they are and if they

19

are all in place now.

20

just that.

We had this discussion for several reasons, the

So I have that as the first topic, and these

21

MS. LEE:

22

District Council.

23

It took a little while to get off the

As I said before, it took some time, and

Thank you, your Honor.

Theresa Lee for the

Each of the mechanisms that I am going to talk about

24

are in place right now with the simple caveat that the

25

electronic reporting mechanism is going to continue to be

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updated and it will be an easier interface, but the structures

2

of it will continue to be the same.

3

THE COURT:

4

MS. LEE:

5

THE COURT:

6

What does it mean?

Is it working now?

Yes, it is working now, but once the -Maybe for people who may not know, explain

what it is, how it works, and what needs to be improved.

7

MS. LEE:

8

So on all jobs with three or more members working on

9

Certainly, your Honor.

them, the union assigns a shop steward to the job.

The shop

10

steward is charged with reporting all of the hours worked for

11

both him or herself and all of the other members working on the

12

job site.

13

that is issued by the District Council.

That can either be done through an electronic tablet

14

THE COURT:

15

MS. LEE:

To the shop steward?
To the shop steward or through just any

16

Internet connection, online portal.

Many stewards actually

17

like to use their own smart phones, so they are only carrying

18

one thing as opposed to carrying the tablets around as well,

19

which are a little more unwieldy than just your iPhone in your

20

pocket.

21

the -- with actually using the portal.

22

to the electronic reporting unit.

23

portal wouldn't sort of cause those hours not to be captured.

They also can call in if they are having issues with

24

THE COURT:

25

MS. LEE:

They can also call in

So having issues with the

So is this done daily, weekly?
So we were at the point, the agreement was

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within 72 hours of the time worked, and sort of consistently

2

throughout it's been quite a high percentage, in the high

3

nineties, of compliance with that.

4
5

THE COURT:

eight-hour day, that's going to be captured --

6

MS. LEE:

7

THE COURT:

8

MS. LEE:

9

So within 72 hours of somebody working an

Yes, your Honor.
-- in the system.
Right.

And if shop stewards are identified

who have not reported the time as they are supposed to, the

10

business rep center, in conjunction with the inspector

11

general's office, will call people in, sort of, to be

12

reprimanded, for lack of a better description, and if there is

13

a continuing problem, it can be grounds for a shop steward

14

being brought up on shop steward review.

15
16

THE COURT:

Just so everybody knows, this is called

the anticorruption device because how does it fight corruption?

17

MS. LEE:

In sort of two ways.

18

One, it allows another anticorruption mechanism I was

19

going to mention is that the benefit funds and the District

20

Council have sort of finally -- this is one of the things your

21

Honor mentioned that took longer in implementation -- gotten

22

their computer systems working in such a way that the council

23

receives a feed of the hours for which benefits are paid so the

24

hours can sort of be tied out, for lack of a better

25

description, to ensure that the hours are being reported worked

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to the District Council and also that the benefits are being

2

paid to the benefit funds.

3

One of the issues, as I'm sure your Honor recalls,

4

sort of back in the early days, Judge Haight's days, was large

5

underpayment of benefits and then if companies would either

6

proceed to bankruptcy or have other fiscal issues, it would

7

lead to an extreme deficit, and the health of the funds

8

obviously sort of bounced back sort of quite considerably after

9

the refocus after the 2010 stipulation.

10

THE COURT:

Is it fair to say that, in the old days,

11

that benefits were underreported to the amount of hours

12

actually worked?

13

MS. LEE:

Yes, your Honor.

There could also -- that

14

would be sort of an instance where the contractor was falling

15

down on its duties in paying the benefits.

16

potentially have been incidents where some number of people on

17

the job site were sort of cutting cash deals, where they

18

weren't being paid for certain hours, but the corporation

19

itself was still paying out the benefit hours.

20

out from both sides, your Honor, to make sure that the hours

21

are being reported worked and the benefits expected are being

22

paid.

23
24
25

THE COURT:

There also could

So it ties it

Is the electronic system such that the

same report goes to the benefit funds when it goes to -MS. LEE:

No.

The District Council receives a feed

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what the benefit fund receives because the contractors have two

2

weeks to make their benefit remission.

3
4

THE COURT:

Okay.

So where is that in the scheme of

implementation?

5

MS. LEE:

That is all implemented and working.

6

Getting the feed to tie out was one of the issues that I

7

referred to that took sort of longer in the period.

8
9
10

THE COURT:

So we now have what percentage of

confidence that the number of hours worked is accurately
reflected in the benefits received?

11

MS. LEE:

I don't actually know the numbers on that,

12

your Honor.

I know that when there is a certain discrepancy,

13

either plus or minus, of hours, it is further reviewed or

14

audited or whatever the sort of correct term would be.

15

THE COURT:

16

MS. LEE:

I see.
And so, in addition to having the feed tie

17

out with the benefit funds, the electronic reporting is also an

18

anticorruption mechanism because, in addition to the portal

19

where the steward can report hours, each member of the District

20

Council also can log in via their UBC number to the Watchdog

21

portal, which shows them their whole job site, your Honor, so

22

it is not only the hours they worked in a given period, it's

23

the hours that were reported for everyone on their job site had

24

worked.

25

THE COURT:

So an individual worker can confirm that

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(a) they worked, he knows how many hours he worked on a

2

particular day, and can have confidence that his benefits are

3

going to reflect the number of hours.

4

MS. LEE:

Yes.

And also, your Honor, he can confirm

5

that, in fact, all 16 workers were paid on the books because

6

all of their names are there and all of their -- each of their

7

eight hours is demonstrated there as well.

8
9

And the Watchdog portal sort of ties into two other
anticorruption mechanisms, I would say, as well.

One is what

10

you have included here on your agenda, your Honor.

11

one-to-one matching provision always ensures that there is

12

actually a member on the job site such that there are potential

13

eyes into the Watchdog system.

14
15

THE COURT:

The

So you do think it has an anticorruption

element because a member is on every --

16

MS. LEE:

Job site, correct.

17

THE COURT:

18

MS. LEE:

19

So, for two reasons, both for logging into the

20

Watchdog, and as the IM has said, and also I believe the review

21

officer has confirmed, they have only ever received complaint

22

calls or sort of calls flagging issues.

23

want to say complaints, but flagging potential concerns from

24

members.

25

use of -- and he can correct me if I am wrong -- has made use

-- two-man jobs.
Yes.

I don't necessarily

No one from sort of an outside council has ever made

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of the RO or IM hotline.

2

THE COURT:

To say, for example -- really.

3

MR. McGORTY:

That's correct, your Honor.

We have

4

never received contact by a nonmember of the District Council

5

reporting on some concern in the workplace.

6

MS. LEE:

And then, in addition to the IM's hotline,

7

which obviously will last only as long as the monitorship, the

8

office of the inspector general, which obviously has a much

9

broader anticorruption mandate and reach than just related to

10

electronic reporting, but that office also has a hotline, both

11

a toll-free number and also an e-mail address for which they

12

receive intake calls, including job site issues.

13

And, additionally, from the inspector general's

14

office, there are also job cite inspectors who predominantly

15

are retired carpenters, so previous members of the council, so

16

they understand the workings of a job site, what is sort of

17

supposed to be required from the terms of the CBAs and they

18

routinely inspect job cites sort of throughout the council.

19

So all of those mechanisms are in place.

20

The electronic systems will have a new interface page

21

when the rest of the IT program is up and running, but the

22

current interface works in all the ways I have described.

23

is sort of a systems upgrade, so it will ideally be more user

24

friendly.

25

THE COURT:

Okay.

So, in times past, I seem to

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remember that people say it is at 85 percent implemented or 90

2

percent or whatever.

3

in progress?

4
5

MS. LEE:

Are we all implemented now or is it still

Well, the additional IT or everything I have

just described?

6

THE COURT:

7

MS. LEE:

Well, what you just described, for one.
What I just described is all in progress and

8

functions.

The rest of the IT upgrade is expected -- which

9

touches on many areas, not just anticorruption-related, but

10

would be expected to be live by 2017, so two and a half months,

11

I guess.

12

And the electronic reporting and the OWL systems,

13

which would interface most directly with what we have just been

14

discussing, are entering sort of a role-playing testing phase,

15

where actual employees of the council are going to play the

16

role of steward and contractor to make sure intake of all

17

information is sort of working properly within the electronic

18

system.

19

system, as opposed to it just being an IT interface used by

20

council employees, it obviously has a much wider user base, so

21

they have had to start doing this extra round of testing to

22

make sure that when it actually launches and there is however

23

many, you know,

24

launches properly.

25

undergoing right now.

Because stewards and contractors enter data into the

1500 stewards working in it, that it actually
So that's the form of testing that that is

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THE COURT:

2

MS. LEE:

3

THE COURT:

Okay.
Thank you.
Here is a broader question either for you

4

or maybe Judge Jones, and I also would like to hear the

5

government's response and Mr. McGorty.

6

So, I think it is fair to say that the collective

7

bargaining agreements, which gave up, as it were, to the

8

employer full mobility, right, which is a major concession, one

9

of the considerations for doing that were these electronic

10

reporting anticorruption measures.

11

need to have a long discussion, but, Judge Jones, was that good

12

deal?

13

suggest that these are the only two provisions that were

14

subject to negotiation in the collective bargaining agreement,

15

but do you think people still feel that this was the right

16

deal, so to speak?

17

So, overall -- and I don't

Was that bargain the right one to this for that?

MS. JONES:

Not to

Yes, I think actually both sides think it

18

was a very good deal.

I think, just to go back to something

19

your Honor said before, with respect to two-man jobs, for

20

instance, where the international agreement comes into play,

21

with our two-man jobs, we have all of the protections that we

22

need because there are members there, even though there are no

23

electronic devices and so forth.

24

international agreement, which we are now grieving as opposed

25

to enforcing, the minute you have an international agreement,

But the minute you have an

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you have two people there who have no connection.

Presumably

2

they are not going to be calling the hot line, as Ms. Lee has,

3

I think, described quite well, and also we wouldn't even know

4

they were there, frankly, unless they report it.

5

aside, they are not going to be letting us know if their hours

6

aren't being reported.

7

deal with the international agreements at the moment.

8

way they are.

9

the --

Leaving that

There is just no mechanism for us to
It's the

And that's why -- well, I won't get into what

10

THE COURT:

We will come back to that.

11

MS. JONES:

Sure.

12

THE COURT:

Do you feel the same, counsel for the

13
14

government?
MS. LaMORTE:

I would just say the government is

15

hesitant to comment on whether a deal was good enough from a

16

labor policy perspective.

17

THE COURT:

18

MS. LaMORTE:

Why?
Well, because our role here and our

19

purpose is to ensure that there are -- that the union is run

20

free from racketeering and corruption.

21

THE COURT:

22

MS. LaMORTE:

So, from that perspective, do you -From that perspective, we support the

23

CBAs and we believe they should remain in place.

24

that the critical anticorruption features are the electronic

25

reporting, Operation Watchdog and the IG inspectors being able

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to visit job cites.

2

If we look at the record of what was presented to the

3

court in connection with the court's approval of these CBAs,

4

the matching provision was not something that was addressed by

5

anyone.

6

the District Council did not bring it to the court's attention.

7

The government was unaware that that was an issue, and

That said, in answer to the court, we are open to

8

looking at data that contradicts this, if there is any; but,

9

from our perspective, this out-of-town and matching agreement

10

was not a critical component of the anticorruption measure

11

which led to the government agreeing on consent to these CBAs

12

and the relinquishment of full mobility.

13

MR. McGORTY:

Your Honor, I am somewhere in between, I

14

guess.

Obviously we all agree that the electronic reporting is

15

important.

16

the one issue we raised earlier to your Honor.

17

receive any kind of correspondence, complaints, calls, e-mails

18

and we get, candidly, as many concerns raised by e-mail to an

19

e-mail we have set up as we do on the phone hotline from

20

nonmembers.

I do think, and it is based on, if nothing else,

21

THE COURT:

22

MR. McGORTY:

23

THE COURT:

24
25

We don't

You don't get?
We do not.
Is that surprising?

Probably not so

surprising.
MR. McGORTY:

True, but it underscores the point that

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having members on these job sites is a key vehicle, I believe,

2

into my office, into the IG's office, and these other

3

components of the system that are about anticorruption.

4
5
6

So using that data, it's not really hard data, but
anecdotal data, I do think that is a measure.
MS. JONES:

Your Honor, I just wanted to go back a

7

little ways to when the international agreement issue burst on

8

to the scene.

9
10

THE COURT:

Can we hold that for a second?

I am going

to come to the court case and the Second Circuit --

11

MS. JONES:

Okay.

12

THE COURT:

-- in just a minute.

13

MS. JONES:

Sure.

14

THE COURT:

But here is a question I'm not sure makes

15

any sense, but in a two-man job, electronic reporting would be

16

what, wouldn't make sense?

17

member --

18

MS. LEE:

Somebody, particularly the union

For one- and two-person job, your Honor, the

19

contractor submits the hours to the District Council, and then

20

it can be interfaced in the same way with the Watchdog portal.

21
22

THE COURT:
people --

23

MS. LEE:

24

THE COURT:

25

So somebody can -- one of those two

-- can still check through Watchdog.
So, in a sense, is there electronic

reporting or not?

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MS. LEE:

Well, I don't know -- it's electronic in the

2

sense that it can be then accessed via the electronic portal to

3

which all the District Council's worked hours sort of exist in

4

that database.

5

through the device on the job site by the steward.

6

It's not electronic in the sense of submission

THE COURT:

So how does it get transmitted?

At the

7

end of the day somebody calls up and says, I worked eight

8

hours.

9

MS. LEE:

Oh, the contractor, your Honor, I believe,

10

has five days from payday to submit those hours, because that

11

still allows the council to have it in sufficient time such

12

that the tie-out with the feed from the benefit funds can still

13

work, because the council would have that before the benefit

14

funds, before remission to the benefit funds has been

15

necessary.

16

MS. LaMORTE:

17

just to fill out the picture?

18

Your Honor, may I add one other point

It's my understanding -- and maybe the District

19

Council can correct me if I am wrong, but it's my

20

understanding, as well, that even on these two-man agreements,

21

where they invoke an international so are not staffed by

22

District Council members, the contractor still needs to report

23

that job to the District Council, is that right?

24

MS. LEE:

To open the job, begin the job?

25

MS. LaMORTE:

Right.

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MS. LEE:

Yes.

2

MS. LaMORTE:

So that job is supposed to be reported

3

to the District Council and the District Council IG's office

4

also has its investigators that it can send out to that job if

5

they determine that's the best use of their resources.

6

THE COURT:

Okay.

Anybody else?

7

There are people here from the District Council.

If

8

they wish to be heard on these subjects, they actually know

9

these subjects probably more intimately than any of us.

I am

happy to hear from anybody if you want to comment.

Okay.

10
11

No?

So, Mr. McGorty, back to your third interim report, I

12

notice at page 17 through 19 there was an issue about -- called

13

the membership relief fund.

14

want to tell us a little bit about that?

15

is in your report, and is that a big problem or --

16

MR. McGORTY:

That caught my attention.

Did you

You describe it, it

Your Honor, I don't actually think the

17

numbers bear out it being a big problem.

18

any discrepancy of contractors not paying into the funds or, in

19

this instance, this particular fund run by the local

20

dockholder's union, any funds that are due.

21

THE COURT:

I'm concerned about

So here, the issue wasn't the absence of

22

data, right?

We know in this instance, this council knows that

23

there were so many hours put in and that the contractor owed X

24

dollars for benefits, right?

25

been that, when money was delinquent or not paid at all, the

But the problem seems to have

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system seems to have fallen down as to capturing that

2

underpayment.

3

MR. McGORTY:

The discrepancy, that's exactly right,

4

your Honor.

5

officer, my predecessor, Mr. Walsh, he believed that the

6

companies owed for a particular year approximately 140,000

7

which is based on the ten largest companies.

8
9

I think when this was uncovered by the review

There was a delay through a number of things happening
in the union in 2012 and '13, before my time, but currently

10

there is a software system in place that is identifying these

11

discrepancies.

12

it was about $20,000.

13

but we are hopeful that we will be able to match up these years

14

in time to capture the bigger picture and then collect.

15

We have only determined for one year I believe

THE COURT:

I'm not saying that's not significant,

So I guess the problem is, the longer it

16

goes, who knows if a contractor is still around, solvent, in

17

business or whatever.

18

later than to have gotten it sooner.

19

MR. McGORTY:

It is probably more difficult to get it

I think that's fair, your Honor.

I

20

think the numbers are being revealed that they are not as

21

significant.

22

your Honor's other issue about grievances, because that's been

23

our experience as well.

24
25

You know, it is funny, to segue, it is on here,

One of the things we have been working with the
District Council to do is to look at this tremendous backlog of

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grievances, and they have made some strides to categories

2

certain grievances that are just too old, too complicated, not

3

going to yield significant returns on the efforts to try and

4

streamline this process and work -- get the grievance process

5

sooner.

6

So we have tried to help them identify these

7

categories and help them make some hard decisions about what

8

categories of grievances should be handled in different ways.

9
10
11

THE COURT:
categories?

So there could be what, a dozen

What can be grieved, so to speak.

MR. McGORTY:

It ranges from individual grievances

12

about contractors to more widespread grievances in total.

13

There is a whole variety.

14

fulsome report to your Honor on this issue.

We are more happy to make a more

15

But I will say to your Honor, it is worth mentioning

16

that, on our proposed list of goals, that we are working with

17

concrete goals to move the union to the next phase, the

18

District Council to the next phase, focusing on where the

19

grievance department is and how they have been able to

20

streamline and maybe get rid of some of the backlog, to focus

21

on the more urgent, the more collectible efforts I think has

22

been undertaken in good faith by the District Council and I

23

think that's a priority for the purposes of the goals as it

24

relates to the grievances department.

25

THE COURT:

There is a grievance department.

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MR. McGORTY:

2

THE COURT:

3

MR. McGORTY:

There is.
And it has staff?
It is.

Paul Tizner, who is in charge of

4

that department, and he is sitting in the second row from the

5

right.

6

THE COURT:

7

MR. TIZNER:

8
9
10

You have a department that does what?

THE COURT:

So would they be lawyers in your

department?
MR. TIZNER:

12

THE COURT:

13

MR. TIZNER:

Would they be what?
Lawyers?
We utilize the services of lawyers mostly

for arbitration.

15

THE COURT:

16

MR. TIZNER:

17

We adjudicate the

grievances and handle arbitrations.

11

14

Yes, your Honor.

But they are District Council employees?
They are not District Council employees.

They are employed by the council.

18

THE COURT:

19

MR. TIZNER:

They --

They do the grievance?
No.

Actually mostly I do the grievances.

20

If they don't get settled in grievance and they move to

21

arbitration, it will be more involved, and then, generally

22

speaking, not in all cases, but generally speaking, an attorney

23

would be present.

24
25

THE COURT:
you recently had.

So how about a live example of one that
Tell us how has it progressed through your

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2

department, to you, to arbitration.
MR. TIZNER:

We will take a simple one.

A member

3

doesn't get his paycheck within 24 hours.

4

are supposed to get it within 24 hours of a layoff.

5

receive it.

6

Business rep forwards it electronically to my office.

7

contact both the contractor and all the parties interested as

8

soon as possible.

9

first two to three days.

10
11

Contractually they
They don't

They file a grievance through a business rep.

amount of time.

We

My thing has been to try to do it within the
Generally we have it out within that

Sometimes it is two or three hours.

Then we set up a grievance hearing.

We generally do

12

it by association, so we will break it out by the various

13

associations, and we will set dates.

14

Wall and Ceiling in one day, hear their grievances, BCA, GCA,

15

whoever it is that we have to have come in.

16

So this way we can have

So the grievance hearings will proceed.

We will call

17

and send notice to the members, to the contractors.

18

a hearing.

19

simple in a case like that.

20

was cut, when it was mailed out.

21

settle it.

22

it sounds, you may have a consideration where a job is going

23

overnight, and a member goes out and they go to work and they

24

are starting at 10:00 at night at Queens Center Mall and the

25

job runs until 5:00 in the morning.

We listen to the facts in evidence.

We convene

It is pretty

We want to look at when the check
If it is easily settled, we

In some instances it is not because, as simple as

The foreman and the shop

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steward both want to go home and go to bed, and the office

2

isn't open at 5 in the morning, so there isn't the ability to

3

get the check out that morning.

4

things.

5

arbitration.

6
7

So you have to listen to those

If there is not an agreement, then we move to

THE COURT:

Do you hear all of them or are there other

people in your staff who hear the grievance?

8

MR. TIZNER:

9

THE COURT:

10

MR. TIZNER:

11

THE COURT:

12

MR. TIZNER:

Primarily I hear them all.
You hear them all.
Yes, sir.
On paper first?
I review them on paper, as well as the

13

reps.

14

supervisors.

15

look at them.

16

can do that, if it is real simple or perfunctory, it gets done.

17

If not, it goes to calendar.

18

THE COURT:

19

24
25

They come to my department.

Notice is issued.

I

If I can make a call and settle it, sometimes I

MR. TIZNER:

And what happens?

It goes to arbitration

Grievance first; arbitration if it is not

resolved.

22
23

They get reviewed by their

next?

20
21

They bring them in.

THE COURT:

How does arbitration kick in?

You refer

it?
MR. TIZNER:

We would get a date from an arbitrator.

Each contract has specified arbitrators in the contract.

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have that arbitrator set a date.

2

attorneys for the company, the arbitrator, and the hearings

3

proceed.

4
5

THE COURT:

So if it is there, then it's a big deal, I

guess, because you have lawyers and papers or no?

6

MR. TIZNER:

7

THE COURT:

8

MR. TIZNER:

9

We set the date with the

among the parties.

To some degree.

Sometimes it can be.

What might go to arbitration?
Anything that there is a disagreement

If you have somebody, a lot of times we

10

will say it is a matter of principal that I want to bring it

11

in.

12

If there is not, it would be dismissed.

13

there is merit, it is going.

14

THE COURT:

15
16

I am going to hear it in an arbitration if there is merit.
But most times, if

What would you say the percentages that

stop with you versus go on to arbitration?
MR. TIZNER:

I would say it is probably about 85

17

percent are handled in grievance, and probably 15 percent to

18

arbitration.

19

THE COURT:

Great.

20

MR. TIZNER:

21

THE COURT:

22

So now litigation.

Thank you, your Honor.
Thank you.
First, I am interested, I think I

23

know the status, but first is the NLRB case that is pending in

24

the Second Circuit.

25

MS. LEE:

I don't know that it is fully briefed.
Yes, your Honor.

It is not fully briefed.

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2
3
4
5
6

The reply brief is due on November 28.
THE COURT:

And what is, just so people would know,

what is the issue there?
MS. LEE:

The issue there, though I am not the one

litigating it, your Honor, is that the -THE COURT:

It's a case that was originally resolved

7

in the National Labor Relations Board in Washington and now is

8

on appeal --

9

MS. LEE:

Is on appeal to the Second Circuit.

The

10

cement league, one of the signatory associations, a member

11

contractor of the cement league, several of their workers

12

transferred from the Northeast Regional Council to the New York

13

City District Council because the provision in the cement

14

league contract of matching out of town members and I

15

believe --

16

THE COURT:

17

MS. LEE:

They were opposed to it.
The cement league was not.

The cement

18

league is in agreement with the District Council.

19

Northeast Regional Council and the NLRB now are opposed.

20

THE COURT:

The

That's the complainant, the Northeast

21

Regional Council, whatever it is called?

Are they the ones who

22

have complained that this is against the Labor Management

23

Relations Act or whatever.

24

MS. LEE:

25

THE COURT:

Yes, your Honor.
And the ruling by the NLRB was that it is.

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MS. LEE:

2

THE COURT:

3

Yes.
So that's been appealed to the Second

Circuit.

4

MS. LEE:

To the Second Circuit.

It is being

5

litigated by our appellate counsel, Bredhoff & Kaiser, Andy

6

Roth from that firm, who I believe came and met your Honor on

7

an earlier occasion.

8

THE COURT:

9

Is it fair to say if that ruling is up held, that is

10

the end of the matching for the two-man job, right?

11
12

MS. LEE:

Well, for the cement league contract, your

Honor.

13
14

He did.

THE COURT:

Oh, you don't think it's got broader

implications?

15

MS. LEE:

It depends on what the ruling ends up

16

saying.

17

severance provision than some of the other CBAs so I think

18

there are a couple of things sort of moving out there as to the

19

specificity of each of the different CBAs.

20

the Second Circuit upheld that being struck down, it might

21

clear a very easy path for other associations to challenge the

22

provision, but I don't think that it would lead to automatic

23

effect, because it is not the same thing as like a statute

24

being struck down.

25

I believe the cement league contract has a different

THE COURT:

I do think that if

All right.

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The last item on my agenda is the Wall-Ceiling case,

2

Judge Jones was talking about that.

3

think, at our last meeting, albeit somewhat briefly, we didn't

4

have full briefing on the issue.

5

necessary yet, if it comes to that.

6

figure out, I am, what the next steps are or hear from the

7

union, what they think the next steps are with respect to this

8

issue.

9

So when we discussed it, I

I don't think it is actually
But we are trying to

So this is the issue that Judge Jones was raising that

10

implicates the international agreement.

11

I have, Judge Jones, is that I have never really been able to

12

determine how big a problem this really is, which has to do

13

with how many times somebody invokes the international

14

agreement; and, on those occasions, what happens when they do?

15

So I don't know how big a deal it really is.

16

So the first question

You will remember, that the arbitration decision that

17

I reviewed and that we all talked about is what's called the

18

declaratory judgment decision.

19

in any particular or specific case.

20

actually -- I do now, but I didn't even know that arbitrators

21

rendered declaratory judgment rulings.

22

any particular case and, in fact, I think the arbitrator

23

specifically, in his award, said, I am not deciding any

24

particular case and leaving one to think that -- and I thought

25

he actually specifically said this -- that when the case comes

It was not a decision rendered
I didn't even know that

So it did not resolve

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up where it actually happens, some other arbitrator will have

2

to make that determination.

3

MS. JONES:

I'm with you, your Honor.

I'm not sure.

4

I never encountered a declaratory judgment in an arbitration

5

either.

6

THE COURT:

I don't think our colleagues on the Second

7

Circuit did either, actually.

8

their opinion.

9

Nobody seemed to mention it in

But whatever.

MS. JONES:

Let me say this:

What isn't over is the

10

issue that was remanded to your Honor from the Second Circuit,

11

which is whether or not the international agreements are a

12

danger, are presenting a problem to us with respect to our

13

anticorruption efforts.

14

You have asked the $64,000 question here, what steps

15

have we taken.

16

conference, at least, we believe that it is important to figure

17

out what the numbers are.

18

you from our own records it looks like, according to

19

Mr. Murphy, four or five international agreement contractors

20

who use them with respect to the BCA.

21

Wall-Ceiling, it appears to be many more than that, perhaps as

22

many as 36 or more.

23
24
25

Mr. Murphy is on vacation but, since the last

We have our own records.

I can tell

With respect to

Now, that doesn't give us the numbers of how often
these contractors invoke the international agreement, and so -THE COURT:

Or what happens when they do.

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MS. JONES:

Or what happens when they do.

And that's

2

the kind of information that we would like to obtain so that we

3

can figure out what the answer to the question is.

4

Mr. Murphy has been in touch with the Wall-Ceiling

5

representatives, both Mr. Rosen and Mr. DeLollis, and he has

6

also been in communication, naturally, with the Building

7

Contractors Association.

8

BCA, and that was appreciated, but we are not getting any

9

response from Wall-Ceiling.

10
11
12

THE COURT:

We received some information from

So, frankly we are --

Response like if you write them a letter

and say, How many times did you invoke or like that?
MS. JONES:

I don't know honestly, Judge, whether

13

Mr. Murphy has put anything in writing, but I can tell you that

14

he has told me that he has tried to have conversations on this

15

subject in order to talk about the information we need on a

16

number of occasions.

17

So we think the first step is to find out how big the

18

problem is, and then how these are working beyond that, once we

19

have that information.

20

after some discussion with Wall-Ceiling and BCA, perhaps there

21

could be a negotiated understanding.

22

at least we could make a specific representation with respect

23

to the impact on our anticorruption devices.

24
25

THE COURT:

And then we think we could come back,

But, even without that,

So in the real world, as it were, as

opposed to in the declaratory judgment world, what happens if

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tomorrow there is a two-man job crops up and somebody is out of

2

town?

What happens in the here and now if someone --

3

MS. JONES:

You mean the international agreements?

4

THE COURT:

Yes.

5

MS. JONES:

I guess all I can say is --

6

THE COURT:

Does the job go forward?

7

MS. JONES:

Well, yes.

When it is called in, it is

8

called in as an international agreement.

9

by definition.

10
11
12

It is a two-man job,

We go out and we grieve it.

So grievance is --

it goes to Mr. Tizner.
THE COURT:

Before the work is done even?

Does the

job happen?

13

MS. JONES:

Yes, they are on the job.

14

THE COURT:

So they do it?

15

MS. JONES:

Yes.

16

THE COURT:

Okay.

17

MS. JONES:

Well, they come, it's a start-up and we

18

will give them a grievance on that, and that's what's been

19

going on while all of this litigation was happening.

20

So that's where we are, in that we haven't been able

21

to get to the next step.

22

difficulty giving us this information, but it is very hard for

23

us to say anything in response to your Honor's question until

24

we have it.

25

THE COURT:

I don't think there should be any

I got it.

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MS. JONES:

The only other thing I would say is, you

2

know, this may not be a matching specifically, but it is a

3

member oversight issue, which has always been in the forefront

4

of the goal here and the remedy.

5

oversight, I think we made this point, it is going to be very

6

difficult to get anything at all in terms of real compliance.

If you don't have member

7

THE COURT:

8

Is there anybody here from Wall-Ceiling, by the way?

9

There was last time.

I gotcha.

Did you want to be heard?

10

MR. ROSEN:

Yes, your Honor.

11

Good afternoon, your Honor.

Mark Rosen, from McElroy,

12

Deutsch, Mulvaney & Carpenter, for the Wall and Ceiling

13

Association.

14

THE COURT:

Right.

15

MR. ROSEN:

With respect to this issue that's been

16

raised to us for the first time, that is, the amount of times

17

that there is invocation of the international agreement, it's

18

been raised for the first time, to my knowledge, in the letters

19

that your Honor requested in advance of this hearing.

20

has made a specific --

21

THE COURT:

That's some time ago.

22

MR. ROSEN:

What's that?

23

THE COURT:

That's some time ago.

Nobody

We discussed that.

24

I don't remember the last -- Mr. McGorty, you would remember

25

when the last time we convened here was.

I think it was in the

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summer.

2

MR. McGORTY:

3

THE COURT:

Might have been June, so it was raised

MR. ROSEN:

Your Honor, the first time we were

4

Early summer.

them.

5
6

notified was in Mr. Murphy's letter to the court in advance of

7

this hearing today.

8

THE COURT:

Whatever.

9

MR. ROSEN:

No, I was not.

10

THE COURT:

No?

11

MR. ROSEN:

International agreement was in effect and

But regardless -Were you here in June?

12

invoked two decades prior to the May 13 collective bargaining

13

agreement.

14

information that's within the possession of the District

15

Council.

16

Wall and Ceiling members invoke the international.

17

So they should have a baseline.

And this is

They should have a baseline of how many times a year

I think, as Judge Jones said, the international is the

18

same as a two-man job under the collective bargaining

19

agreement.

20

Council number.

21

it even easier for the District Council to track these jobs.

22

So you have this five-year baseline prior to May of

You have to call it in.

It is assigned a District

It has a different prefix, so that should make

23

2013, when the new CBA was approved.

The expectation at that

24

time was that, with this alternate route to two-man job under

25

the CBA, the need to invoke the international would go down.

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Unfortunately, we had the dispute that arose so in the past --

2

I think in somebody's letter there was a reference to the past

3

five years.

4

years since May of 2013 is going to be instructive, because we

5

had all this uncertainty.

It went to arbitration, your Honor's

6

decision, and the appeal.

But I think if you look at the

7

baseline, prior to the May 2013 CBA, I think that would give

8

you some idea of the number of times our members invoke the

9

international agreement.

I don't think the past five years or the three

They are asking -- I don't know if

10

they are asking us to represent what's going to happen going

11

forward, which we can't --

12
13

THE COURT:

No, I think they are asking how many times

has it been invoked.

14

MR. ROSEN:

We don't know.

15

THE COURT:

You don't know?

16

MR. ROSEN:

We don't have that information.

17

THE COURT:

Wait a minute.

The international doesn't

18

have the information as to how often the international

19

agreement provision was invoked?

20

MR. ROSEN:

I don't represent the international.

21

THE COURT:

So you represent --

22

MR. ROSEN:

An association of contractors.

23

THE COURT:

So you don't know either?

24

MR. ROSEN:

We don't track how our members call in

25

jobs.

That's information solely in the possession of the

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District Council.

2

job location, if it's two-man --

3
4

A member contractor submits a form with a

THE COURT:
better.

Wait a minute.

Let me understand that

I guess I am sure I don't.

5

Let's take a job one of your clients is involved in.

6

MR. ROSEN:

Not one of my clients, one of my client's

8

THE COURT:

Okay give us a real-world --

9

MR. ROSEN:

XYZ Corporation gets a job.

7

members.

The job is

10

going to start.

11

form.

12

three -- if it's going to be more than two carpenters, they

13

have got to request a steward; give a location; approximate

14

start date.

15

It is assigned a job number.

16

assigned a steward and off they go.

17

get any of that.

18

and the union.

19

They have to fill out a form, a job initiation

They list address; if it's going to be more than

It's faxed in or e-mailed to the District Council.
If it needs a steward, it is
The association does not

That's just between our member contractors

THE COURT:

Okay.

So to know whether or not somebody

20

is saying that this two-man job is covered by the international

21

agreement or not, how do we find that out?

22
23
24
25

MR. ROSEN:

I don't know how the District Council

maintains its data; but, as I said, if somebody invokes the -THE COURT:

Wait a minute.

If District Council

thinks, let's say rightly or wrongly, that the collective

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bargaining agreement covers, they will just treat it as a

2

collective bargaining agreement job and they will treat it in

3

accordance with the provisions of the collective --

4

MR. ROSEN:

Well, what's actually been happening, your

5

Honor, is members who continue to try and invoke the

6

international agreement check the box on the form for IA, the

7

District Council has been crossing it off and assigning a

8

normal District Council number.

9

data.

Again, they would have that

10

THE COURT:

You don't have a copy of the time --

11

MR. ROSEN:

The association does not get any of that

12

information.

We do not get involved in that process.

13

MS. JONES:

Your Honor --

14

THE COURT:

So if you are waiting, I guess, for them

15

to respond, it sounds like you are going to be here a long

16

time.

17

MS. JONES:

I don't know if -- well, Mr. Murphy did

18

indicate that apparently the BCA has that type of information,

19

and I don't know if they --

20

MR. BRAID:

Your Honor, Greg Braid, counsel for the

THE COURT:

Could you spell your name for the court

21
22
23

BCA.

reporter.

24

MR. BRAID:

B-R-A-I-D.

25

Similar to Mr. Rosen's representation to the court,

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the BCA is not in this picture.

The same form gets filled out

2

by our members and sent to the council.

3

contractors are members of the BCA who are based outside the

4

jurisdiction of the District Council.

We just know how many

5

THE COURT:

Right.

6

MR. BRAID:

From my conversations with Jim Murphy

7

prior to today, he was referring to council records as we were

8

talking, there were only two contractors, BCA contractors, that

9

have active jobs currently and over the last four or five years

10

a total of six.

11

THE COURT:

Six?

12

MR. BRAID:

Contractors who have made use of the

13

international agreement for these two-person jobs.

14

THE COURT:

Invoked it?

15

MR. BRAID:

Yes.

16

THE COURT:

And what happened.

17

MR. BRAID:

The union has grieved.

18

THE COURT:

Wait.

19

MR. BRAID:

The same thing that Mr. Rosen described.

You said before --

20

The collective bargaining agreement requires that those jobs be

21

reported.

22

checked off for international agreements, so they get the

23

benefit of that.

24
25

A form is sent in to the union and the box is

THE COURT:

You are saying they white out that and

they just proceed as if it is a CBA?

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MR. BRAID:

I don't know.

I just know that grievances

2

have been filed and there is a bunch of them pending by the

3

District Council against BCA members.

4

THE COURT:

So does the job get done in the meantime?

5

MR. BRAID:

Yes.

6

THE COURT:

And then the grievance.

7

MR. BRAID:

Correct.

8

THE COURT:

And what is the grievance?

9

MR. BRAID:

Presumably --

10

THE COURT:

Is it a dollars and cents --

11

MR. BRAID:

I assume the District Council's position

12

would be, you know, you had two people who are outside the

13

jurisdiction working on this job.

14

outside the jurisdiction and one from the District Council, so

15

therefore you owe one District Council member --

It should have been one from

16

THE COURT:

A wage.

17

MR. BRAID:

-- wages, because they didn't get the job.

18

THE COURT:

So one could figure out how often it is

19
20
21
22
23

invoked by the number of grievances?
MR. BRAID:

Well, the union would have all the

information -THE COURT:

No, no.

But is that the mechanism?

The

person who grieves is looking for money, right?

24

MR. BRAID:

Number of hours worked.

25

THE COURT:

This is not a trick question.

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trying to figure out.

2

the number of grievances on that issue?

3

MR. BRAID:

So is the measure of frequency or amount
Is that the way --

The number of hours worked on the job that

4

the union would maintain should have been worked by a District

5

Council --

6

THE COURT:

I get it, but that's in a grievance,

8

MR. BRAID:

Yes.

9

THE COURT:

Is that the way to analyze it, by

7

right?

10

analyzing the list or the box or the number of grievances that

11

have been filed?

12

MR. BRAID:

Well, in terms of the question that we

13

understand that is before the court now on the remand from the

14

Second Circuit is to evaluate whether the invocation of the

15

international agreement undermines the anticorruption

16

objective, and we can't see, frankly, if we have two members --

17

THE COURT:

That is the theoretical question, right?

18

But in the real world, let's say that, exactly as it is, so

19

Judge Lynch's decision is the decision, so in the real world,

20

though, if it is not happening, I mean, it's an interesting

21

decision and you agree that it is a declaratory judgment

22

arbitration that gave rise to that decision?

23

MR. BRAID:

Well, there were two important

24

distinctions for the BCA.

25

arbitration.

One, we were not a party to that

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THE COURT:

2

How about you, counsel?

3

MR. ROSEN:

4

Right.

I don't know what the import everybody is

putting on the phrase "declaratory judgment."

5

THE COURT:

I am saying it means that, as it always

6

does, it is a ruling of law, but there is no case there, so

7

nobody, as a result of that decision -- it's not a trick

8

question.

9

decision, he says, I am making a declaratory ruling.

I actually noticed it when you read the arbitrator's
It is not

10

binding.

11

result of his decision, he didn't say that anybody was owed

12

money or anybody was overpaid.

13

theoretical question about whether it is an anticorruption

14

device or not, but in reality, if you don't know how often it

15

is used, what's the significance?

16

everybody around trying to figure out whether this is a real

17

world problem or a more theoretical one?

18

saying.

19

But you have to look at the decision first and, as a

MR. ROSEN:

So, yeah, you have this

Why are we going to chase

For my association, and this is why we

20

pursued it, it's a real world problem.

21

members to whom it is important to.

22
23
24
25

THE COURT:

That's what I am

There are several

Okay, so if that's the case, how could you

not know how many times you have been shortchanged?
MR. ROSEN:

Because we don't have that data.

We don't

track the commencement of jobs or the filing of jobs by our

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members.

That's not the purpose of the association.

2

THE COURT:

So how do you know it's a big problem?

3

MR. ROSEN:

Because members advise that we use the

4

international and need it from time to time, Long Island

5

contractors or New Jersey contractors.

6
7
8
9

THE COURT:

So it is hearsay that they use it.

That's

MR. ROSEN:

I think hearsay and supported by the fact

it?

that if we get discovery as we move forward and we see -- ask

10

for the job initiation forms that our members file, we will be

11

able to tell your Honor how many times our members invoked

12

international.

13

MR. BRAID:

And I would submit, your Honor, that in

14

terms of evaluating the impact of this on undermining

15

anticorruption mechanism you have to look at how many hours of

16

work are represented by the invocation of the international

17

compared to the total number of hours worked by District

18

Council members.

19

respect to the BCA, it's an infinitesimal percentage.

And I would submit, I have certainly with

20

THE COURT:

Small.

21

MR. BRAID:

Can't possibly undermine the

22
23
24
25

anticorruption provision.
THE COURT:

If it's so small, how is it a big problem

for your members?
MR. BRAID:

Well --

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2
3

THE COURT:

If it's infinitesimal so that it can't

have any impact, how in the world can your members be -MR. BRAID:

Well, it is important to the two members

4

of the 160 members that the BCA bargains on behalf of the --

5

with the District Council.

6

with the BCA is that, unlike the Wall and Ceiling contractors,

7

which negotiates the agreement with the international, the BCA

8

does not negotiate an agreement with the international.

9

member who has that agreement has negotiated that agreement on

10
11

their own.

And another complicating factor

Each

So the BCA is not negotiating it.

THE COURT:

So those two members in your association

12

to whom it is a concern, they negotiated the international

13

agreement separately.

14

MR. BRAID:

On their own.

We have nothing.

15

THE COURT:

That's not true of your --

16

MR. ROSEN:

Some of our members have their own

17

agreements and some of them rely on the association's

18

agreement.

19

THE COURT:

Is the language the same?

20

MR. ROSEN:

It's the same agreement, same

21

international agreement.

22

THE COURT:

Okay.

23

MR. BRAID:

Yes.

24

THE COURT:

Okay, thanks.

25

MR. BRAID:

Thank you, your Honor.

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2

THE COURT:

Oh, before you go, so in each case your

collective bargaining agreement comes up when or expires when?

3

MR. BRAID:

It expires June 30, 2017.

4

THE COURT:

And yours, too.

5

MR. ROSEN:

Yes.

6

THE COURT:

Because they were all done roughly at the

7
8
9
10

same time.

Okay.

Well, I don't know what to say, Judge Jones.

I

thought it would be simple to come up with the numbers.
MS. JONES:

So did I, and maybe I have misunderstood

11

something here, but I know Mr. Murphy had been asking for this.

12

Maybe he wasn't told that the contractors didn't have the

13

information.

14

have our own records.

15

In fact, BCA did give him their records and we do

THE COURT:

But we don't know if we have everything.
So would it be fair to say that you would

16

measure it by the grievance, by analyzing -- let's say if you

17

look at all the grievances were in the computer and you could

18

punch in which ones involve international agreement two-man

19

job, would you then know?

20

MS. JONES:

We could certainly do that.

Technically

21

I'm not sure how it would be done, but theoretically it sounds

22

like that would give us some data, yes.

23

that because Mr. Murphy is not here he may know something else

24

about the contracts and the associations.

25

THE COURT:

I am just concerned

Does anybody know what happens in the

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grievance, what the result is of the grievance?

2

course, what happens.

3

MR. ROSEN:

In the normal

Quite frankly, your Honor, since this

4

dispute arose in May of 2013, if somebody attempts to invoke

5

the international agreement, he either rejects the application

6

and files a grievance and we have agreed to hold the grievances

7

in abeyance until the arbitration and motions in front of your

8

Honor and then the appeal --

9

THE COURT:

10

Wait a minute.

You currently are holding

all these grievances in abeyance?

11

MR. ROSEN:

Yes.

12

THE COURT:

They what?

13

MR. ROSEN:

They do not proceed.

14

THE COURT:

Well, there is a Second Circuit, so why

15
16

wouldn't they proceed?
MR. ROSEN:

They don't proceed.

What are they waiting for?

Well, I will take the position now that,

17

given the Second Circuit's opinion, they should be withdrawn;

18

that it has been confirmed that our members have the right to

19

invoke the international agreement notwithstanding the

20

collective bargaining agreement.

21

THE COURT:

So they don't even occur, the arbitration.

22

MR. ROSEN:

Mr. Tizner described they haven't

23

proceeded.

24

THE COURT:

In no instance.

25

MR. BRAID:

The same is true for the BCA, your Honor.

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THE COURT:

Hasn't happened.

2

MR. BRAID:

Correct.

3

MR. ROSEN:

I will just make one comment in terms of

4

looking at the number of grievances to determine the number of

5

times, certainly that would be some indicia.

6

the uncertainty over the last three years, that could affect

7

numbers, because contractors may have been inhibited from --

8

THE COURT:

9

MS. LEE:

But, again, given

Oh, yeah, yeah, I got it.
Your Honor, they would continue to be held

10

in abeyance from the council's perspective until your Honor

11

makes a decision with respect to the remand, whether that -- if

12

the invocation is inconsistent with the anticorruption goals in

13

such a way that it would sort of alter the applicability of the

14

CBA at all, we would consider that they should -- would still

15

be in abeyance at least until your Honor has made a decision on

16

that.

17

Part of the reason why the council --

18

THE COURT:

You have to that decision.

We are going

19

to want the data, right, and then we are going to want briefing

20

after we see the data and/or maybe you all are going to sit and

21

have some negotiation and try and resolve it without -- what is

22

likely, Judge Jones?

23

MS. JONES:

What, frankly, we were hoping for was a

24

dialogue and some negotiation.

When this issue first came up,

25

I was at a meeting where Wall-Ceiling was present, and I think

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Mr. DeLollis, but I'm not sure if it was you -- pardon me,

2

Mr. Rosen.

3

the offer was made, look, we will abide by any of the

4

anticorruption measures that you might want us to use, if you

5

will permit us to have these international agreements, and we

6

understand how important they are.

But at that meeting, what was represented was and

7

So a lot of time has passed, and here we are.

But

8

what we would like to talk about is some resolution of how they

9

can go forward, but we can have some measures that will ensure

10

that we have some oversight.

11

THE COURT:

So is there any plan for you all to --

12

MS. JONES:

I think Mr. Murphy was waiting for

13

information that he thought he requested.

14

that he did.

15

calendars, as soon as this hearing is over.

16
17
18

I don't have a doubt

We can make a plan, get together with our

THE COURT:

Okay.

Mr. Rosen?

You want to add

something?
MR. ROSEN:

I just wanted to add that it is Wall and

19

Ceiling's position, since this issue first arose, that any

20

anticorruption provisions under the CBA would apply to any job

21

invoked under the international agreement.

22

reported, inspectors, anything else.

23

the arbitrator, it is in our papers to your Honor, it was in

24

our papers to the Second Circuit, it's been our position since

25

day one, but that was probably not acceptable to the District

The electronic time

It is in our papers to

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Council.

And I will note, as a matter of fact --

2

THE COURT:

What do you mean it wasn't acceptable?

3

MR. ROSEN:

Well, it doesn't resolve the issue.

4

agree.

We agree.

5

THE COURT:

6

MR. GEIGER:

7

So -Your Honor, Joseph Geiger, the

secretary/treasurer of the District Council.

8
9

We

For the association to come out and say that they have
none of that information Counsel Murphy has been asking for,

10

when a specific contractor applies for an international

11

agreement, our department actually denies it and sends back the

12

information with the job number.

13

that has applied for an international agreement has all of that

14

information, which is part of that association.

15

they don't have that information is totally false.

16
17

THE COURT:

MR. GEIGER:

THE COURT:

21

MR. GEIGER:

23

If you reject it, you send

We send it back to them with a two-person

job number and it says "Denied."

20

22

Wait a minute.

So to say that

it back to them?

18
19

So each and every contractor

All right.
So they are well aware of what's going

on.
THE COURT:

So somewhere, I think from what I am

24

hearing, it is fair to say that between the District Council

25

and between, I guess, your members who are interested in the

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subject, is data that ought to be shared, right?

Just to

2

figure out how big a problem or not this is, right?

3

MR. ROSEN:

Absolutely, your Honor.

4

THE COURT:

So it would be worth some good-faith

5

effort to try and at least understand what the universe of this

6

is, because there is a lot of fighting and a lot of litigation

7

over something which I can't really, for the life of me,

8

determine whether it is a big deal or a little deal.

9

mean to diminish it.

I don't

It is obviously for some of your members.

10

But I can't assess it.

11

all would get together with Mr. Murphy and see if you can't, in

12

the first instance, figure out what the universe is of cases

13

that we are talking about.

14

people were intimidated and didn't bring because of whatever,

15

you could throw that category in, too, in one column as an

16

estimate if you think that's helpful to your cause.

17

that?

18

MR. BRAID:

So I think it would be valuable if you

And even if there are cases that

How's

Your Honor, I think, as to Mr. Geiger's

19

point, the BCA, I am sure, has the grievances because they

20

represent the members.

21

there is any impact on the anticorruption mechanism, we believe

22

the District Council would have the number of hours worked and

23

all of that information.

24

who the District Council is denying the use of the

25

international agreement form, but all the other information is

But more important to resolving whether

We just know that we have a member

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in the possession of the District Council.

2

THE COURT:

However one does it, could you all make a

3

good-faith effort to try and figure out what this universe is,

4

with talking to them and on your own as well?

5

MS. JONES:

We will, Judge.

Although, I will say,

6

when you don't have a member there to validate the hours, yes,

7

we have the hours.

8
9
10

THE COURT:

Do you

all think that would be useful in order to get to the next
step, which is the legal evaluation?

11
12

Maybe come up with some ballpark.

MS. JONES:

We think we have to do that first.

I

would like --

13

THE COURT:

I do agree with that.

I do think it makes

14

sense to know what -- at least have some handle on what the

15

universe of the problem is before you solve it.

16

MR. BRAID:

The BCA agrees.

17

MR. ROSEN:

Wall and Ceiling agrees, as well.

18

THE COURT:

Judge Jones, I am going to give it to you

20

MS. JONES:

-- put together?

21

THE COURT:

Two weeks or three weeks to talk.

19

22

to --

Everybody seems to be in agreement.

23

MS. JONES:

Good.

24

THE COURT:

And if you could send me a letter that

25

reflects your understanding at that point in time.

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MS. JONES:

I will do that, Judge.

2

THE COURT:

If you need more time etc., etc.

3

MS. JONES:

Thank you very much.

4

THE COURT:

Okay.

5

I have exhausted my agenda.

We will, as I usually do,

6

hear from the union, so state your name clearly, and let's hear

7

what you have to say.

8
9
10
11
12

MR. WALSH:
Bill Walsh.

Good afternoon, your Honor.

My name is

I am the record secretary for Local 157, also

sitting delegate.
This is regarding a letter that you received to put on
the docket for today.

13

THE COURT:

That I received?

14

MR. WALSH:

Yeah, well, you sent back a letter to me

15

saying you were going to put it on the docket.

16

THE COURT:

Oh, okay.

17

MR. WALSH:

It's regarding a motion that was put on

18

the floor at Local 157's August 18 meeting by member Greg

19

Kelty, who is also here today and that can also explain his

20

motion, but I am here to talk about my position and how it is

21

my job to send correspondence, anything, through the local.

22

THE COURT:

You passed it along.

23

MR. WALSH:

Basically that's what happened.

24

THE COURT:

You passed it along.

25

MR. WALSH:

But I do want to point out that this

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mostly comes from frustration of the members not getting

2

information on what's going on.

3

what I found out today about you were supposed to have the

4

conference with the -- about the benefits.

5

anything about it.

6

For instance, you had your --

We didn't hear

Mr. Murphy could have easily addressed the delegate

7

body stating that this case was under investigation or give us

8

some kind of -- some dialogue like it was done in the past with

9

other cases.

It's like this one is a little different, and we

10

don't want this to slip through the cracks and not let the

11

members know what's going on.

12

So basically -- and there was a letter circulated by

13

the EST to all the locals that pretty much scorned my behavior

14

about stuff.

15

Perhaps I will give it to the court.

I don't know if you were privy to that letter.

16

THE COURT:

You can leave one.

17

MR. WALSH:

I will leave a copy for you.

And it put

18

me in a bad light.

19

thinking I sent that letter and that it's my intention to cause

20

dissension and the whole thing, and I hope you will let Brother

21

Kelty speak on that topic.

22
23

THE COURT:

And I have been scorned by a lot of members

I will.

So what you are saying is you

passed his concern along to me.

24

MR. WALSH:

Right.

25

THE COURT:

Got it.

Correct.

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MR. WALSH:

And Mr. McGorty can speak about it as

2

well.

Because we did correspond with each other like two weeks

3

after his interim report was put out.

4

waiting to see it on the District Council Web site, and as far

5

as I know, I am the only member that he sent it to and it's

6

been a couple of weeks since it's been out.

7

for the members to see that, and on the Web site.

8

are working on it.

9

day.

Actually we are still

It would be nice
I know they

But they update it with new stuff every

There is no reason why it couldn't be up there, as well

10

as your status hearings, as past practice.

11

up there for members to know.

12

working carpenters be part of the conversation here.

13

You always put that

Because I appreciate you letting

I don't want to take much of your time.

It's pretty

14

much that members need to have transparency, and at the

15

delegate meetings we are not getting the information in a

16

timely fashion as per the consent decree.

17

contract that's up or an addendum, the delegate is getting that

18

like the Friday before the Wednesday meeting.

19

in the last few months, we have been getting it the same night

20

as the meeting, and we are there to vote on it.

21

lopsided delegate body with all council employees voting for by

22

whatever the executive committee wants, and I think that's --

23

you are really not getting a true picture of what the

24

membership wants.

25

If there is a

And sometimes,

It's almost a

I don't want to take up much more of your time.

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appreciate it.

Thank you.

2

THE COURT:

3

Mr. Kelty.

4

MR. KELTY:

5

Thank you.

Gregory Kelty, treasurer of Local 157,

delegate to the District Council, and just a regular member.

6

THE COURT:

Could you spell your last name?

7

MR. KELTY:

K-E-L-T-Y.

8

THE COURT:

Thank you.

9

MR. KELTY:

Your Honor, I was the one who initiated

10

the motion, pretty much read this letter out at the meeting,

11

after several members had asked me about this case, which I had

12

known nothing about essentially.

13

about it at the delegate meeting several months before and got

14

no information on it.

15
16
17
18

One of our delegates asked

So the intent of the letter -- and I don't know if you
read it or not, but -THE COURT:

I did.

It's a long time ago, though, so

remind me.

19

MR. KELTY:

20

(Pause)

21

MR. KELTY:

I will be glad to.

The intent of the letter was for

22

transparency and accountability.

23

rumored there was proposed settlement, which I don't know,

24

because we are not getting any information.

25

Like I said, it's been

But after that letter was sent, there was a letter

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read by EST Joe Geiger at the last delegate meeting, which I

2

would like to present to the court --

3
4

THE COURT:

This is actually the case that's before

Judge Hellerstein, right?

5

MR. KELTY:

That's correct, I believe.

6

THE COURT:

All right.

7

MR. KELTY:

Joe Geiger, our EST, at the last delegate

I do remember now, yup.

8

meeting ripped -- pretty much ripped Bill Walsh and myself

9

apart, creating dissension, siding with the employer.

As a

10

matter of fact, he says, "Everything in this letter is grossly

11

misleading but for purposes appears to cause dissension and

12

simultaneously advocate on behalf of the contractor."

13

First of all, nobody was asking anybody to be removed

14

from employment unless they have discriminated, you know?

15

are not saying accused of discrimination.

16

they are found to be discriminating against the employer,

17

member, whatever else.

We

We are saying if

18

THE COURT:

I got it.

19

MR. KELTY:

Here is one of the issues is that this

20

case is settled out of court and you know, of course, your

21

being a judge.

22

confidentiality agreement, the council is going to claim no

23

wrongdoing, and nobody will be held accountable for possibly 2,

24

$3 million loss, absolutely no one, and the members will never

25

find out what happened.

You know they are going to ask for a

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Now, as far as the delegate meeting, EST Geiger,

2

claiming that we were creating dissension, and you will see in

3

that letter mentions it several times, and while Local 1556,

4

which was Joe Geiger's local, the president submitted a letter

5

which Joe read, further tearing us apart, suggesting that we

6

should be brought up on charges.

7

I want to point out that there are many members on a

8

trial committee also on a delegate body.

So here he is

9

tainting the possible trial committee, if they do bring us up

10

on charges to possibly throw us out of the union, and all we

11

are asking for is transparency and accountability.

12

no -- we are not trying to create any dissension here.

There is

13

THE COURT:

I get it.

14

MR. KELTY:

I would like to further add, and being an

15

outspoken delegate at the meetings, you know, I recently was

16

thrown out of a delegate meeting, and I believe that we are

17

being violated our rights under 29 U.S.C. 411 of the legal

18

code, I believe that's it, and I'm not a lawyer, but being

19

denied our opportunity to speak when we get up to speak.

20

chair starts interrupting us, and it is not just me, it is

21

several members of the delegate body.

22

saying, Excuse me, I have the floor, I haven't yielded the

23

floor to you, he finds us out of order.

24

I'm supposed to be talking here.

25

us out of order two or three times and throws us out of the

The

When we question him or

And then I say, Steve,

I have the floor.

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meeting.

2

At the last meeting, after I got thrown out, I did

3

throw a couple of F bombs.

4

of the meetings, the EST had a tirade on Dan Franco up there,

5

because he was asking for to get the information in a timely

6

manner before the delegate meetings.

7

bombs at Dan and, when he was walking out the door, stopped and

8

he had couple more F bombs to throw at him and then left the

9

room.

10

But prior to me getting thrown out

He must have threw 15 F

Not one "out of order" from the chair.
When I get up, Pat Nee (ph) gets up, Danny Dohr (ph)

11

gets up, we are constantly being heckled by the council --

12

pretty much we call it the council side of the room, because

13

most were council employees.

14

single incident where they are reprimanded or they are found

15

out of order.

And there is usually not one

16

Several years ago, I was pretty much almost physically

17

attacked by the director of -- the regional manager, I'm sorry,

18

the regional manager, which I did write a letter to Matt Walker

19

about the issue, and absolutely nothing happened to him.

20

physically tried to attack me while I was speaking because I

21

was speaking on the Hudson Yards issue, which he was a regional

22

manager of, when one of the contractors was out of compliance

23

for almost a year.

24

required to have 50/50.

25

He

He was using full mobility and he was

So there was an issue on the floor and I was bringing

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it up.

2

finally, I turned around and said, Would you shut up?

3

he came at me, had to be subdued by the security officers.

4

The regional manager kept on interrupting me and,
And then

In our personnel policy, it is stated that this guy is

5

supposed to be removed from the building and have a full

6

investigation and not be able to return to the building until

7

an investigation is completed.

8

personnel policy that every council employee has an obligation

9

to write a report on the incident, including the IG's office,

10

which Patrick Kennedy from the IG's office was sitting right

11

there during the whole incident.

12

It also states in that

Now, later, a couple of months later, Pat Kennedy

13

says, Well, you kind of instigated it.

14

there speaking.

15

what I had to say about the whole incident doesn't give him any

16

right to attack me.

17

Instigated it?

I'm up

Just because he doesn't particularly care for

And I do have that letter -- unfortunately, I didn't

18

date it -- to Mr. Walker right here if you would like to see

19

it.

20

THE COURT:

21

A VOICE:

22

THE COURT:

Do you know what the approximate date was?

23

MR. KELTY:

It was probably approximately a year and a

24
25

Is that an extra?
I have another.

This came off my e-mail.

half, two years ago.
THE COURT:

Okay.

I got it.

Okay.

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MR. KELTY:

My point is the intimidation of our

2

delegates, if you are an outspoken delegate, you are being

3

intimidated; and, by them doing what they are doing to us,

4

there's other delegates in the room that are kind of cautious

5

about getting up and saying anything.

6

THE COURT:

I hear you.

7

MR. KELTY:

One last issue, and this goes to how the

8

fairness is going on, and you know all about the Daley case.

9

He has been suspended over 18 months, and that's indefinite.

10

But recently, one of the members on our member's voice team was

11

an employee at the school.

12

now, we blew 'em out at Local 157.

13

election, he was fired from his job for text messaging

14

apprentices and encouraging them to come down and vote.

15

name is Bill McKenneth.

16

third interim report.

Twelve hours after the election -Twelve hours after the

His

I don't know if it is mentioned in the

17

Recently it came to our attention, as delegates, one

18

of our council reps, Rob Vallerte, was accused of pretty much

19

stealing time and falsifying records, because he wasn't at work

20

when he was supposedly supposed to be at work and he was

21

claiming he was.

22

true, that he lied to the IG or he tried to get somebody to lie

23

to the IG saying he was there.

24

We have members losing their jobs for text messaging members to

25

come down and participate to vote, and then we have another

It was also said, and I don't know if this is

He got a two-week suspension.

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member who essentially -- and Rob is the executive delegate of

2

2790, as John Daley was our executive delegate.

3

summarily dismissed as ever being a shop steward or ever

4

running for office while this guy gets a slap on the risk.

5

It's absolutely absurd what's going on here.

6

Thank you, your Honor, for your time.

7

THE COURT:

8

Why don't we wait to hear if there

is anybody else.

9
10

Wait.

He is

MR. McGONNIGLE:

Thank you, your Honor, for allowing

us to speak.

11

I just wanted to come back -- I came today, of course,

12

to defend my two other executive board members.

13

president of Local 157.

I am a vice

My name is Thomas McGonnigle

14

THE COURT:

Could you spell your last name?

15

MR. McGONNIGLE:

16

This month is 35-year member of this local of this

M-C-G-O-N-N-I-G-L-E.

17

union.

18

to be good for the next guy coming behind me.

19

It's been great to me.

I would like to see it continue

Needless to say, Greg brought up a few very valid

20

points.

It has to do with transparency and double standards

21

that go on with how retribution is given out to the members of

22

this local and the District Council.

23

John Daley, who you know, sitting behind me, indefinite

24

suspension from being a shop steward, indefinite suspension

25

from being an elected officer, and you were just told of Rob

One, on behalf of Brother

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Vallerte with a two-week suspension which was handed down and

2

back with no problem being executive delegate.

3

really a lot of retribution.

4

I mean, it is

John was an outspoken executive delegate for the

5

membership of Local 157 any time he was elected, any time he

6

was a regular delegate.

7

York City District Council.

8

hammered.

9

months.

They don't like that down at the New
If you speak out, you get

I am taking a chance.

I'm going to retire in 16

I can see myself getting a hard time, but you know

10

what?

I'm going to do the right thing for the guys coming

11

behind me.

That's why I am here today.
Thank you.

Thank you.

12

THE COURT:

Anybody else from the union?

13

We are going to have to wrap up soon, so we will make

14

you the last one, and then I might ask you, Mr. McGorty, if you

15

know the status of the Hellerstein case.

16

sure --

17

MR. McGORTY:

I'm not exactly

I would like to address that and I would

18

also like to address some of the things we have heard already

19

briefly.

20

THE COURT:

21

MR. FRANCO:

Okay.
Good evening, your Honor.

My name is Dan

22

Franco, member of Local 157, currently a delegate -- I was

23

elected in the last election -- formerly a recording secretary,

24

and I have run for other offices, as well, such as EST.

25

Today I have a few questions.

The first one is about

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the consent decree.

And as far as I know, the consent decree

2

is about running the locals and the council democratically and

3

to avoid unlawful influence from the outside of its membership.

4

In 2010, I sent a letter to Supervisor Spencer

5

requesting certain things that I thought would help democracy.

6

That didn't get responded to.

7

following spring.

8
9

I sent another letter in the

That didn't get responded to.

Several of the things on that list was to have shop
steward reports on line.

Thereafter, the RO made a decision to

10

push for the electronic reporting.

The electronic reporting is

11

not how I envisioned it, but it's in my opinion I guess better

12

than nothing.

13

in and see the time of any job so that they can verify for

14

themselves and remove rumor of who was on what job at what

15

time.

But what I wanted was that any member could log

16

THE COURT:

17

MR. FRANCO:

Your own job or anybody's job?
Anyone's job.

If you are a member of one

18

of the locals of New York City, in my opinion, you should be

19

able to see any other member of New York City on any job.

20

wasn't done.

21

That

What's even worse, as far as I know, is if you go to

22

the Watchdog, if you go to the Web site and you look under the

23

Watchdog, it only allows for the two previous weeks or maybe a

24

week -- I haven't done it in a while -- and it only allows it

25

on the job that you are on.

So I find that very limited.

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wish it was a little bit more than that.

2

The other thing is, I'm not looking to vacate the

3

consent decree any time too soon, because it protects us

4

against our international; however, we do have a lot of

5

expenses, particularly through lawyers and other

6

representation.

7

I find that very disconcerting, the number of employees that we

8

have and the cost that they come with.

9

the salaries, particularly for the council reps.

We are adding many employees to the council.

10

25 percent pension.

11

out of the 25 percent.

12

I am assuming it is the accountant.

13

speculation.

14

Because it is not just
They also add

As far as I understand, they only get 21
I don't know where the 4 percent goes.
But that's only

The other thing is, the reporting of the hours is done

15

by stewards electronically through the Web site but, as far as

16

I know, the one- and two-person jobs, they call it in daily.

17

Somebody on that job, to my knowledge, has to call that job in

18

daily.

19

site could be updated to be more efficient.

20

The reporting can be done more efficiently -- the Web

The hours reported, when you -- there is a box to

21

supply information about the job.

At one time, I was supplying

22

information about the job and I was saying that it was -- the

23

reporting wasn't working correctly.

24

and then I got called saying I wasn't submitting my hours.

25

That's because there was an error on the Web site.

I didn't get a response,

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resolved.

I had to sign some document.

But I admitted no

2

wrongdoing because it was a problem with the system.

3

I found out that nothing that gets put in that box gets

4

reviewed by anyone unless there is an issue, and they have to

5

be told and then they will go back and review it.

6

really put anything in that box since.

7

in my reporting of hours, I have to contact a rep by e-mail

8

they make a decision to forward that to the -- to someone else,

9

and then it eventually gets back.

However,

So I haven't

When I make a mistake

It is usually pretty quick

10

now since we have a system in place.

To my understanding,

11

however, on a one- or two-person job, that person can call the

12

rep and say "correct my hours."

13

electronically to my knowledge.

They don't have to do anything

14

The nonmembers not calling the IG or the IM, it's not

15

likely to happen, because they are either a member for only --

16

a nonmember for seven days, because if you are going to be

17

working under the union contract, you have to become a member

18

within seven days in outside employment or 30 days in shop

19

employment.

20

going to call.

21

So it's highly unlikely that a nonmember is ever

I have addressed, at the delegate meetings and

22

previously, motions by e-mail.

I have asked for this practice

23

to stop.

24

rules to allow for it.

25

Rules of Order when it's not provided in the UBC constitution,

We cannot have motions by e-mail because there are no
Our UBC constitution refers to Robert's

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and Robert's Rules of Order says no electronic meetings without

2

electronic meeting rules.

3

it.

4

So I have been trying now to avoid

One particular concern is, we don't know if we have a

5

quorum.

6

everybody.

7

see the vote.

8

calculation of who voted on what.

9

e-mail vote, it should be a roll call vote.

10

I assume we do, because the e-mail is sent out to
However, we never get to see the vote.
I don't see any reporting of it.

So I never

There is no

If you are going to have an
It should be

shown.

11

In particular, since I became a delegate and

12

previously, before that, is the timeliness of reports and

13

documentation.

14

wasn't at the last meeting, but the three previous meetings, I

15

bring up the timeliness.

16

intentional.

17

before for the executive committee meeting or the trustee's

18

meeting and we don't get the executive committee meetings from

19

the previous meeting until the following month, they are almost

20

a month behind, they are 20-something days behind, so we don't

21

know what happened the day before.

I have addressed this at every meeting.

I

I have been told that it is not

However, when you are having meetings the day

22

THE COURT:

23

A VOICE:

You mean the minutes?
Yes.

We don't get the meeting minutes of

24

the executive committee meeting minutes until the following

25

meeting.

So we have to wait 20-something days before we get

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those meeting minutes.

2

Continuing on, the LM-2 states that there are 12

3

administrative assistants at my council, not including the

4

president and vice president, who are only supposed to be

5

getting $300 for doing the presidential duty and $200 a month

6

for doing his vice president duty.

7

listed as assistants.

8

990s as vice president and president getting in excess of

9

$200,000 a year.

10

However, they are not

They are listed in the LM-2s, 5500s, and

As I see it, it is a violation of the bylaws.

Not getting the documentation within five days is a

11

violation.

12

not until the Friday evening previous to the Wednesday meeting

13

for the delegate meeting that we started to get the meeting

14

minutes.

15

is like the last second to send us anything.

16

be five days, and we didn't start getting it until the evening.

17

The best time to send anybody anything if you don't want them

18

to read it?

19

reporters know that, politicians know that.

20

release bad information or information you don't want somebody

21

to read, you send it out on Friday evening.

22

We get almost nothing until that evening.

It was

I mean that we started getting documentation.

Friday evening.

That

It's supposed to

It is the best.

The news

If you want to

However, they have been getting better.

They started

23

sending these documentation out one or two e-mails the previous

24

Thursday.

25

So now we are starting at six days.

But the bulk of the message -- bulk of the e-mails and

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documents and reports don't get sent to us until Friday evening

2

to Monday morning and Tuesday morning, the day before the

3

meeting.

4

been told it's not intentional, and I don't agree with that and

5

I called them out on it.

6

Sometimes we get information the day of.

THE COURT:

And I have

Let's wrap up pretty soon because I want

7

to hear from Mr. McInnis and then briefly Mr. McGorty to

8

respond.

9

MR. FRANCO:

That was the last thing.

The benefit

10

fund's meeting minutes, benefit fund meeting minutes, we, as

11

delegates and additional members, have asked for the benefit

12

fund's meeting minutes because we would like to see what goes

13

on at those meetings.

14

minutes so far.

15

states that we, the delegates, get to approve the

16

recommendation of the next trustees to the benefit funds.

17

if I am going to be asked to approve a trustee, I would like to

18

see what they have done.

19

not entitled to those meeting minutes is ridiculous.

20

be entitled to those meetings minutes and we should start

21

receiving them as soon as responsible.

22

Thank you very much.

23

THE COURT:

24

By the way, you are very welcome to be heard, but we

25

We have been denied those meeting

However, in Section 5(b)(9) of the bylaws, it

So

So for them to tell us that we are
We should

Thank you very much.

are not going to go back and forth.

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MR. McINNIS:

2

THE COURT:

3

No, I'm not trying to cut you short.

It

will be in the record, but I don't want an ongoing dialogue.

4

MR. McINNIS:

5

THE COURT:

6

MR. McINNIS:

7

THE COURT:

8

I am going to keep it very quick.

Just one statement for the record.
Fair enough.
There has been a lot -First tell us who you are.

Stephen

McInnis, president of District Council.

9

As the president of the council, it's part of my duty

10

to make sure I run a fair meeting, a fair meeting where people

11

can be heard, people want to express their thoughts, where the

12

voice of the minority is heard, but the will of the majority is

13

enacted.

14

I know you are a very busy man, your Honor, but if you

15

listen to some of these meetings where some of these

16

individuals I will pick to speak five, ten, twelve times, the

17

vulgarity, the immaturity, and the blatant disregard for their

18

own organization that they were elected to be a representative

19

of, it's actually disgusting.

20

only District Council employees, but rank-and-file delegate

21

members from every local in the council that says I should be

22

less open to hearing these remarks.

23

couple, a handful of guys over the years, and I do let it go to

24

a point, but at a certain point, I have to fulfill my duty.

25

THE COURT:

And I have been spoken to not

I have only thrown out a

I agree with that.

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MR. McINNIS:

And some of the pieces that he has

2

referred to, we are the most transparent council in the UBC.

3

We meet 12 times a year.

4

What he is referring to, there is nothing saying get things out

5

five days ahead of time, but we do the best we can, Matt

6

Walker, the director of operations, does a great job in that.

7

Most councils meet four times a year.

We do do an open mike.

Sometimes the meetings go

8

three and four hours.

But the arrogance, disregard, and the

9

petty minutiae is, frankly, embarrassing and I concur with Glen

10

having a say in that, because he has sat through these

11

meetings, he has been insulted at these meetings as an officer

12

of the court and it's, frankly, embarrassing to me as a member.

13

THE COURT:

14

Mr. McGorty, you are going to get the last word.

15

MR. McGORTY:

16

your Honor.

Thank you.

A lot of pressure, a lot of pressure,

Fortunately, I do have thick skin.

17

THE COURT:

You can handle it.

18

MR. McGORTY:

19

I just wanted to say just a couple of things.

Right.

I can, I can.

20

should come to all the delegate meetings, your Honor.

21

sure you have plenty of time.

22

THE COURT:

23

MR. McGORTY:

You
I am

I don't want to come to all of them.
The exchange of ideas that you just

24

witnessed, your Honor, is something very, very different than

25

the dynamic of the delegate meetings.

And I will also say, I

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have individually met with most members of the union who spoke

2

at the podium, and I have had, I think, productive and healthy

3

conversations with them about their interest in the union.

4

I don't know what happens, your Honor, when everyone comes

5

together and there are delegates there and there are other

6

folks from the locals and the same individuals make comments

7

and other folks who are not here make comments, and it does

8

spiral out of control and it is extremely frustrating.

9

Obviously, you heard the frustration from both sides.

But

It is

10

frustrating for the members who don't feel like they are being

11

heard.

12

It is frustrating for the leadership.
I have been at maybe two-thirds of the -- half to

13

two-thirds of the delegate meetings that have been held since I

14

have been here, and I have struggled to try and figure out what

15

my role is exactly.

16

things that are motivating the members to be upset are not the

17

product of corruption but simply the product of democratic

18

disagreement.

19

District Council leadership, and it is not going to be popular

20

with the members that are here, but I have not one time seen an

21

incident or spoken to them and believed that anything that they

22

have done in connection with either running the meetings or

23

running the District Council has been the product of

24

corruption.

25

democratic disagreement.

I think my job is to make sure that these

And I will say that I have worked with the

Okay?

There is a product of hard work but

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The gentleman who spoke earlier disagreed with certain

2

things the District Council does.

That doesn't mean the

3

District Council is corrupt.

4

Council isn't trying to let them be heard.

5

democratic disagreement that is also frustrating the

6

democratically elected leadership of the District Council,

7

because the way these issues come up are at meetings where

8

Robert's Rules of Order are supposed to be followed and things

9

are brought up and squeezed in and said in a way, whether it's

It doesn't mean the District
It's that

10

intentional or not, that leads to dissension within these

11

meetings, when it is not the right forum for these issues to be

12

raised.

13

I have seen Mr. McInnis at the podium struggle with

14

members.

I have seen the frustration from members who don't

15

feel they are being heard.

16

think someone was silenced inappropriately.

17

situation where I didn't think that the issues that they have

18

raised shouldn't have been raised.

19

your Honor, and that is the frustration that I have.

20

And it is not a widespread problem.

I have not seen a situation where I
I have not seen a

It is just not working,

I have gotten as

21

many complaints about certain decisions the District Council

22

made, I have gotten the same or more complaints from members,

23

who are maybe not as outspoken, who are frustrated by the

24

members who are outspoken and are making these meetings two,

25

three, four hours.

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Little things come up, your Honor, that are just

2

inaccurate.

3

things.

4

Let me just clear the record on a couple of

First of all, here is my frustration with 157's

5

September 22 -- and I will be brief, your Honor -- September 22

6

letter.

7

me and to a number of people when, at the time that this letter

8

was sent, maybe not when it was passed in a resolution in

9

August, or whenever it was, but when it was sent, it contained

My issue is that this letter went to your Honor and to

10

information that I had raised in my report.

There was no

11

settlement negotiation.

12

letter went out nonetheless.

13

Mr. Walsh about it, and I don't think Mr. Walsh sent this out

14

personally.

15

was.

16

got sent, it wasn't accurate, and maybe they should have

17

stopped and said, Hey, we can't send that letter out.

18

didn't happen.

19

Honor, is to send a message out to other members that there may

20

be discrimination, maybe the leadership should be fired because

21

of it, there has been a settlement, they are not telling us

22

about the settlement.

23

report that I did send to Mr. Walsh, because he diligently

24

asked for my report, and I sent it the day I filed it with your

25

Honor, it addressed that.

None of that had happened.

Yet, this

And I actually I did speak with

He was doing what I believe he believed his job

But the reality is, your Honor, at the time this letter

But it

So the only effect of something like this, your

There wasn't a settlement.

And in my

So that's a frustration for me.

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I hear the fact that this should be on the Web site.

2

Your Honor, I will make sure that it is by the next time -- not

3

by the next time we meet, but certainly by the next report.

4

These will be posted.

5

kind of easy transparency can be worked.

6

Court conferences will be posted.

That

But I just believe, your Honor, that it is, again, I

7

just think it is painting a picture of the leadership of the

8

District Council trying to squash ideas when it is actually

9

just trying to run its meetings properly.

I just think there

10

must be another forum for this, because it is not working as it

11

is now.

12

speak for, I believe, the larger group.

13

that's only because I hear from the other unspoken minority

14

that complain about how these meetings are going, and it's not

15

because of the leadership of the District Council.

This is a few vocal members that don't necessarily
That being said,

16

Your Honor, there are other little things that I

17

mentioned that we don't need to get into, small things --

18

THE COURT:

I think we have got the picture.

19

MR. McGORTY:

20

THE COURT:

21

Mr. Johnson, I am going to modify something I said

Okay.
So I think that concludes our meeting.

22

before.

I do think that there should be transparency on that

23

issue.

24

met with your trustees so I can tell them firsthand that that's

25

what I plan to do.

I think I will wait to publicize it until after I have

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MR. JOHNSON:

2

THE COURT:

3

Nice to see you all.

4

COUNSEL:

5

Thank you, your Honor.
You bet.

Thank you, your Honor.
- - -

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