CourtTranscript2016 10 17

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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.

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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
little agenda, which is based on Mr. McGorty's report, in part,
and issues that I am aware of from that report and also issues
that have been pending here for some time.
So I am going to ask Ms. Murray to hand them out.
There is not enough for everybody, so if you could share maybe
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:
MR. BAHN:
THE COURT:
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.
The prior executive director, your Honor, left, I
believe it was in April of 2015.
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
had been the interim for the prior year.
The new position is a chief financial officer, which
fits well with Mr. Lesniewski's experience.
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
some return on investment as opposed to losing.
So, anyway, you will remember that I suggested that it
might be helpful -- and I certainly thought it would be, and I
doubly think that today, to have some independent entity or
person or accountant or whatever come in and take a look.
I think I remember Mr. McGuire said, Yup, we will get
right on it, and then there ensued a series of letters back and
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.
back.
to hear back today or tomorrow, whenever that endorsement was.
Never heard back.
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
be some reason that the trustees don't want to meet.
it.
Mr. McGuire.
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?
MR. McGORTY:
I will do that, your Honor, yes.
THE COURT:
Just so you know, if there is going to be a meeting --
And we will see if we can accommodate you.
let's have the meeting and I will explain what people should
know then, but I am very much up on the issue, and I think more
than ever that some hard look needs to be taken, and that's
what I will convey to the trustees as well.
I do think we need
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

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said.
There are my meetings in the sort time I have been
engaged, there is a commitment on the part of the trustees of
the fund, obviously maximizing the returns for the members, and
to upholding the future obligations.
meeting, and we appreciate that your Honor's door is open.
will take advantage of that and obviously work with the monitor
to get dates as soon as possible.

Great.
There is a desire for a
THE COURT:
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
he writes, "My team, led by Katherine Lemire and her staff at
Lemire, investigated the matter."
your Honor shall be in receipt of the report documenting the
findings of the investigation submitted under seal concurrently
with this report, I do not provide additional details regarding
the investigation here."
does wish to make clear, however, that the trustees of the
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
unsealing the matter.
aware of it.
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
that the issues were uncovered years ago, several years ago,
even before Mr. McGorty, who is relatively new, before his
tenure.
prepared, it is almost mind boggling about the back and forth
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
back and address -- sometimes it is important to underscore
there is a lot of complexity here.
referenced, it is hard to boil it down simply to any one thing.
As your Honor yourself
Let me start by saying that, to be very clear, since
you have aired this issue, to be very clear, this was brought
to the -- as soon as this matter was brought to the attention
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.

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MR. McGORTY:
Right, your Honor.
I was actually just
addressing that one last piece.
Your Honor, the report lays out what is a very
complicated issue, that it wasn't simple and was complicated
internally, and I just wanted to point out, when it did come to
light to the relevant parties, who have been in front of you,
your Honor, it was brought to my attention.
number only because --
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.
investigation this summer that we began the prior summer.
we are in constant contact with counsel for the trustees
throughout the year.
they have taken the issues that it raised quite seriously and
have taken action based upon it.
I would say we completed our
We have provided the report.
But
I believe
I think, your Honor, one of the issues -- they could
address this if they want -- but one of the issues they raise,
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 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
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dollar amount, well beyond my technical capabilities, but that

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number has not been determined yet is my understanding.
THE COURT:
MR. McGORTY:
Ballpark?
Your Honor, I'm going to have to leave
that to fund's counsel.
I'm not sure of the latest.
MR. JOHNSON:
I think we certainly understand the ruling from the
bench.
As Mr. McGorty --
THE COURT:
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?
there are recovery efforts.
One would have thought -- well, whatever.
And I understand
Those should be proceeding apace.
I think that really the important issue here is that
the members need to know about this.
That was Mr. McGorty's
instinct initially.
province, so to speak, of the enumerated duties that he has, as
I am.
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
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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
make sure that we clarify the record that the facts are clear,
and I think this is -- certainly I understand your Honor saying
it shouldn't be that complicated.
complicated, and I want to get it right.
to work with Mr. McGorty.
THE COURT:
right approach in any event.
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--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
I
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
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a particular look or not, but there are some -- yes, they are
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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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will save some time, as I do, for people who wish to be heard.
Judge Jones, could we move to District Council now?
Anything else anybody want to say anything else with respect to
the benefit funds?
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No?
MS. JONES:
Okay.
Your Honor, Ms. Lee is going to handle
parts of this.
THE COURT:
Okay.
That's fine.
MS. JONES:
Thank you.
THE COURT:
So one issue that we have been talking, we
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always seem to talk about is the anticorruption mechanisms that
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were introduced in the current series of collective bargaining
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agreements.
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primary one being that there are anticorruption mechanisms, and
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we want to get -- I want to get the status of where they are in
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terms of implementation.
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ground, as I remember, but significant progress seemed to have
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been made.
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components, first of all, identify which they are and if they
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are all in place now.
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just that.
We had this discussion for several reasons, the
So I have that as the first topic, and these
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MS. LEE:
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District Council.
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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
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are in place right now with the simple caveat that the
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electronic reporting mechanism is going to continue to be

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updated and it will be an easier interface, but the structures
of it will continue to be the same.
THE COURT:
MS. LEE:
THE COURT:
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.
MS. LEE:
So on all jobs with three or more members working on
Certainly, your Honor.
them, the union assigns a shop steward to the job.
The shop
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steward is charged with reporting all of the hours worked for
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both him or herself and all of the other members working on the
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job site.
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that is issued by the District Council.
That can either be done through an electronic tablet
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THE COURT:
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MS. LEE:
To the shop steward?

To the shop steward or through just any
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Internet connection, online portal.
Many stewards actually
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like to use their own smart phones, so they are only carrying
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one thing as opposed to carrying the tablets around as well,
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which are a little more unwieldy than just your iPhone in your
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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
throughout it's been quite a high percentage, in the high
nineties, of compliance with that.
4
5
THE COURT:
eight-hour day, that's going to be captured --
MS. LEE:
THE COURT:
MS. LEE:
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
paid to the benefit funds.
One of the issues, as I'm sure your Honor recalls,
sort of back in the early days, Judge Haight's days, was large
underpayment of benefits and then if companies would either
proceed to bankruptcy or have other fiscal issues, it would
lead to an extreme deficit, and the health of the funds
obviously sort of bounced back sort of quite considerably after
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
weeks to make their benefit remission.
3
4
THE COURT:
Okay.
So where is that in the scheme of
implementation?
MS. LEE:
That is all implemented and working.
Getting the feed to tie out was one of the issues that I
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
particular day, and can have confidence that his benefits are
going to reflect the number of hours.
MS. LEE:
Yes.
And also, your Honor, he can confirm
that, in fact, all 16 workers were paid on the books because
all of their names are there and all of their -- each of their
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.
THE COURT:
To say, for example -- really.
MR. McGORTY:
That's correct, your Honor.
We have
never received contact by a nonmember of the District Council
reporting on some concern in the workplace.
MS. LEE:
And then, in addition to the IM's hotline,
which obviously will last only as long as the monitorship, the
office of the inspector general, which obviously has a much
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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It
25
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remember that people say it is at 85 percent implemented or 90
percent or whatever.
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?
THE COURT:
MS. LEE:
Well, what you just described, for one.

What I just described is all in progress and
functions.
The rest of the IT upgrade is expected -- which
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:
MS. LEE:
THE COURT:
Okay.
Thank you.
Here is a broader question either for you
or maybe Judge Jones, and I also would like to hear the
government's response and Mr. McGorty.
So, I think it is fair to say that the collective
bargaining agreements, which gave up, as it were, to the
employer full mobility, right, which is a major concession, one
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
they are not going to be calling the hot line, as Ms. Lee has,
I think, described quite well, and also we wouldn't even know
they were there, frankly, unless they report it.
aside, they are not going to be letting us know if their hours
aren't being reported.
deal with the international agreements at the moment.
way they are.
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

(212) 805-0300
We believe
28
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to visit job cites.
If we look at the record of what was presented to the
court in connection with the court's approval of these CBAs,
the matching provision was not something that was addressed by
anyone.
the District Council did not bring it to the court's attention.
The government was unaware that that was an issue, and
That said, in answer to the court, we are open to
looking at data that contradicts this, if there is any; but,
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,
into my office, into the IG's office, and these other
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
little ways to when the international agreement issue burst on
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
sense that it can be then accessed via the electronic portal to
which all the District Council's worked hours sort of exist in
that database.
through the device on the job site by the steward.
It's not electronic in the sense of submission
THE COURT:
So how does it get transmitted?
At the
end of the day somebody calls up and says, I worked eight
hours.
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.
MS. LaMORTE:
So that job is supposed to be reported
to the District Council and the District Council IG's office
also has its investigators that it can send out to that job if
they determine that's the best use of their resources.
THE COURT:
Okay.
Anybody else?
There are people here from the District Council.
If
they wish to be heard on these subjects, they actually know
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
underpayment.
MR. McGORTY:
The discrepancy, that's exactly right,
your Honor.
officer, my predecessor, Mr. Walsh, he believed that the
companies owed for a particular year approximately 140,000
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.
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
certain grievances that are just too old, too complicated, not
going to yield significant returns on the efforts to try and
streamline this process and work -- get the grievance process
sooner.
So we have tried to help them identify these
categories and help them make some hard decisions about what
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:
THE COURT:
MR. McGORTY:
There is.
And it has staff?
It is.
Paul Tizner, who is in charge of
that department, and he is sitting in the second row from the
right.
THE COURT:
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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1
2
department, to you, to arbitration.

MR. TIZNER:
We will take a simple one.
A member
doesn't get his paycheck within 24 hours.
are supposed to get it within 24 hours of a layoff.
receive it.
Business rep forwards it electronically to my office.
contact both the contractor and all the parties interested as
soon as possible.
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
isn't open at 5 in the morning, so there isn't the ability to
get the check out that morning.
things.
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?
MR. TIZNER:
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.
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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We
37
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have that arbitrator set a date.
attorneys for the company, the arbitrator, and the hearings
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?
MR. TIZNER:
THE COURT:
MR. TIZNER:
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.
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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1
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
in the National Labor Relations Board in Washington and now is
on appeal --
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:
THE COURT:
Yes.
So that's been appealed to the Second
Circuit.
MS. LEE:
To the Second Circuit.
It is being
litigated by our appellate counsel, Bredhoff & Kaiser, Andy
Roth from that firm, who I believe came and met your Honor on
an earlier occasion.
THE COURT:
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,
Judge Jones was talking about that.
think, at our last meeting, albeit somewhat briefly, we didn't
have full briefing on the issue.
necessary yet, if it comes to that.
figure out, I am, what the next steps are or hear from the
union, what they think the next steps are with respect to this
issue.
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
to make that determination.
MS. JONES:
I'm with you, your Honor.
I'm not sure.
I never encountered a declaratory judgment in an arbitration
either.
THE COURT:
I don't think our colleagues on the Second
Circuit did either, actually.
their opinion.
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
the kind of information that we would like to obtain so that we
can figure out what the answer to the question is.
Mr. Murphy has been in touch with the Wall-Ceiling
representatives, both Mr. Rosen and Mr. DeLollis, and he has
also been in communication, naturally, with the Building
Contractors Association.
BCA, and that was appreciated, but we are not getting any
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
town?
What happens in the here and now if someone --
MS. JONES:
You mean the international agreements?
THE COURT:
Yes.
MS. JONES:
I guess all I can say is --
THE COURT:
Does the job go forward?
MS. JONES:
Well, yes.
When it is called in, it is
called in as an international agreement.
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
know, this may not be a matching specifically, but it is a
member oversight issue, which has always been in the forefront
of the goal here and the remedy.
oversight, I think we made this point, it is going to be very
difficult to get anything at all in terms of real compliance.
If you don't have member
THE COURT:
Is there anybody here from Wall-Ceiling, by the way?
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.
MR. McGORTY:
THE COURT:
Might have been June, so it was raised
MR. ROSEN:
Your Honor, the first time we were
Early summer.
them.
5
6
notified was in Mr. Murphy's letter to the court in advance of
this hearing today.
THE COURT:
Whatever.
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 --
I think in somebody's letter there was a reference to the past
five years.
years since May of 2013 is going to be instructive, because we
had all this uncertainty.
It went to arbitration, your Honor's
decision, and the appeal.
But I think if you look at the
baseline, prior to the May 2013 CBA, I think that would give
you some idea of the number of times our members invoke the
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

(212) 805-0300
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District Council.
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.
Let's take a job one of your clients is involved in.
MR. ROSEN:
Not one of my clients, one of my client's
THE COURT:
Okay give us a real-world --
MR. ROSEN:
XYZ Corporation gets a job.
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
collective bargaining agreement job and they will treat it in
accordance with the provisions of the collective --
MR. ROSEN:
Well, what's actually been happening, your
Honor, is members who continue to try and invoke the
international agreement check the box on the form for IA, the
District Council has been crossing it off and assigning a
normal District Council number.
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,

(212) 805-0300
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the BCA is not in this picture.
The same form gets filled out
by our members and sent to the council.
contractors are members of the BCA who are based outside the
jurisdiction of the District Council.
We just know how many
THE COURT:
Right.
MR. BRAID:
From my conversations with Jim Murphy
prior to today, he was referring to council records as we were
talking, there were only two contractors, BCA contractors, that
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
have been filed and there is a bunch of them pending by the
District Council against BCA members.
THE COURT:
So does the job get done in the meantime?
MR. BRAID:
Yes.
THE COURT:
And then the grievance.
MR. BRAID:
Correct.
THE COURT:
And what is the grievance?
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.

(212) 805-0300
I am just
51
Gah2disC
trying to figure out.
the number of grievances on that issue?
MR. BRAID:
So is the measure of frequency or amount

Is that the way --
The number of hours worked on the job that
the union would maintain should have been worked by a District
Council --
THE COURT:
I get it, but that's in a grievance,
MR. BRAID:
Yes.
THE COURT:
Is that the way to analyze it, by
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:
How about you, counsel?
MR. ROSEN:
Right.
I don't know what the import everybody is
putting on the phrase "declaratory judgment."
THE COURT:
I am saying it means that, as it always
does, it is a ruling of law, but there is no case there, so
nobody, as a result of that decision -- it's not a trick
question.
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.
THE COURT:
So how do you know it's a big problem?
MR. ROSEN:
Because members advise that we use the
international and need it from time to time, Long Island
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 --

(212) 805-0300
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1
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
of the 160 members that the BCA bargains on behalf of the --
with the District Council.
with the BCA is that, unlike the Wall and Ceiling contractors,
which negotiates the agreement with the international, the BCA
does not negotiate an agreement with the international.
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:

(212) 805-0300
55
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1
2
THE COURT:
Oh, before you go, so in each case your
collective bargaining agreement comes up when or expires when?
MR. BRAID:
It expires June 30, 2017.
THE COURT:
And yours, too.
MR. ROSEN:
Yes.
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.
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?
course, what happens.
MR. ROSEN:
In the normal
Quite frankly, your Honor, since this
dispute arose in May of 2013, if somebody attempts to invoke
the international agreement, he either rejects the application
and files a grievance and we have agreed to hold the grievances
in abeyance until the arbitration and motions in front of your
Honor and then the appeal --
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.
MR. BRAID:
Correct.
MR. ROSEN:
I will just make one comment in terms of
looking at the number of grievances to determine the number of
times, certainly that would be some indicia.
the uncertainty over the last three years, that could affect
numbers, because contractors may have been inhibited from --
THE COURT:
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,
Mr. Rosen.
the offer was made, look, we will abide by any of the
anticorruption measures that you might want us to use, if you
will permit us to have these international agreements, and we
understand how important they are.
But at that meeting, what was represented was and
So a lot of time has passed, and here we are.
But
what we would like to talk about is some resolution of how they
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 --
THE COURT:
What do you mean it wasn't acceptable?
MR. ROSEN:
Well, it doesn't resolve the issue.
agree.
We agree.
THE COURT:
MR. GEIGER:
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
figure out how big a problem or not this is, right?
MR. ROSEN:
Absolutely, your Honor.
THE COURT:
So it would be worth some good-faith
effort to try and at least understand what the universe of this
is, because there is a lot of fighting and a lot of litigation
over something which I can't really, for the life of me,
determine whether it is a big deal or a little deal.
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.
THE COURT:
However one does it, could you all make a
good-faith effort to try and figure out what this universe is,
with talking to them and on your own as well?
MS. JONES:
We will, Judge.
Although, I will say,
when you don't have a member there to validate the hours, yes,
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.
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.
THE COURT:
If you need more time etc., etc.
MS. JONES:
Thank you very much.
THE COURT:
Okay.
I have exhausted my agenda.
We will, as I usually do,
hear from the union, so state your name clearly, and let's hear
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
information on what's going on.
what I found out today about you were supposed to have the
conference with the -- about the benefits.
anything about it.
For instance, you had your --
We didn't hear
Mr. Murphy could have easily addressed the delegate
body stating that this case was under investigation or give us
some kind of -- some dialogue like it was done in the past with
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
well.
Because we did correspond with each other like two weeks
after his interim report was put out.
waiting to see it on the District Council Web site, and as far
as I know, I am the only member that he sent it to and it's
been a couple of weeks since it's been out.
for the members to see that, and on the Web site.
are working on it.
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.
THE COURT:
Mr. Kelty.
MR. KELTY:
Thank you.
Gregory Kelty, treasurer of Local 157,
delegate to the District Council, and just a regular member.
THE COURT:
Could you spell your last name?
MR. KELTY:
K-E-L-T-Y.
THE COURT:
Thank you.
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
would like to present to the court --
3
4
THE COURT:
This is actually the case that's before
Judge Hellerstein, right?
MR. KELTY:
That's correct, I believe.
THE COURT:
All right.
MR. KELTY:
Joe Geiger, our EST, at the last delegate
I do remember now, yup.
meeting ripped -- pretty much ripped Bill Walsh and myself
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,
claiming that we were creating dissension, and you will see in
that letter mentions it several times, and while Local 1556,
which was Joe Geiger's local, the president submitted a letter
which Joe read, further tearing us apart, suggesting that we
should be brought up on charges.
I want to point out that there are many members on a
trial committee also on a delegate body.
So here he is
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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He finds
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meeting.
At the last meeting, after I got thrown out, I did
throw a couple of F bombs.
of the meetings, the EST had a tirade on Dan Franco up there,
because he was asking for to get the information in a timely
manner before the delegate meetings.
bombs at Dan and, when he was walking out the door, stopped and
he had couple more F bombs to throw at him and then left the
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.
finally, I turned around and said, Would you shut up?
he came at me, had to be subdued by the security officers.
The regional manager kept on interrupting me and,

And then
In our personnel policy, it is stated that this guy is
supposed to be removed from the building and have a full
investigation and not be able to return to the building until
an investigation is completed.
personnel policy that every council employee has an obligation
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
delegates, if you are an outspoken delegate, you are being
intimidated; and, by them doing what they are doing to us,
there's other delegates in the room that are kind of cautious
about getting up and saying anything.
THE COURT:
I hear you.
MR. KELTY:
One last issue, and this goes to how the
fairness is going on, and you know all about the Daley case.
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
2790, as John Daley was our executive delegate.
summarily dismissed as ever being a shop steward or ever
running for office while this guy gets a slap on the risk.
It's absolutely absurd what's going on here.
Thank you, your Honor, for your time.
THE COURT:
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
back with no problem being executive delegate.
really a lot of retribution.
I mean, it is
John was an outspoken executive delegate for the
membership of Local 157 any time he was elected, any time he
was a regular delegate.
York City District Council.
hammered.
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
is about running the locals and the council democratically and
to avoid unlawful influence from the outside of its membership.
In 2010, I sent a letter to Supervisor Spencer
requesting certain things that I thought would help democracy.
That didn't get responded to.
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.
The other thing is, I'm not looking to vacate the
consent decree any time too soon, because it protects us
against our international; however, we do have a lot of
expenses, particularly through lawyers and other
representation.
I find that very disconcerting, the number of employees that we
have and the cost that they come with.
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
wrongdoing because it was a problem with the system.
I found out that nothing that gets put in that box gets
reviewed by anyone unless there is an issue, and they have to
be told and then they will go back and review it.
really put anything in that box since.
in my reporting of hours, I have to contact a rep by e-mail
they make a decision to forward that to the -- to someone else,
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
electronic meeting rules.
it.
So I have been trying now to avoid
One particular concern is, we don't know if we have a
quorum.
everybody.
see the vote.
calculation of who voted on what.
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 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.
Continuing on, the LM-2 states that there are 12
administrative assistants at my council, not including the
president and vice president, who are only supposed to be
getting $300 for doing the presidential duty and $200 a month
for doing his vice president duty.
listed as assistants.
990s as vice president and president getting in excess of
$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
to Monday morning and Tuesday morning, the day before the
meeting.
been told it's not intentional, and I don't agree with that and
I called them out on it.
Sometimes we get information the day of.
THE COURT:
And I have
Let's wrap up pretty soon because I want
to hear from Mr. McInnis and then briefly Mr. McGorty to
respond.
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
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
are not going to go back and forth.

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MR. McINNIS:
THE COURT:
No, I'm not trying to cut you short.
It
will be in the record, but I don't want an ongoing dialogue.
MR. McINNIS:
THE COURT:
MR. McINNIS:
THE COURT:
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.
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
referred to, we are the most transparent council in the UBC.
We meet 12 times a year.
What he is referring to, there is nothing saying get things out
five days ahead of time, but we do the best we can, Matt
Walker, the director of operations, does a great job in that.
Most councils meet four times a year.
We do do an open mike.
Sometimes the meetings go
three and four hours.
But the arrogance, disregard, and the
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
at the podium, and I have had, I think, productive and healthy
conversations with them about their interest in the union.
I don't know what happens, your Honor, when everyone comes
together and there are delegates there and there are other
folks from the locals and the same individuals make comments
and other folks who are not here make comments, and it does
spiral out of control and it is extremely frustrating.
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
things the District Council does.
That doesn't mean the
District Council is corrupt.
Council isn't trying to let them be heard.
democratic disagreement that is also frustrating the
democratically elected leadership of the District Council,
because the way these issues come up are at meetings where
Robert's Rules of Order are supposed to be followed and things
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
inaccurate.
things.
Let me just clear the record on a couple of
First of all, here is my frustration with 157's
September 22 -- and I will be brief, your Honor -- September 22
letter.
me and to a number of people when, at the time that this letter
was sent, maybe not when it was passed in a resolution in
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.
Your Honor, I will make sure that it is by the next time -- not
by the next time we meet, but certainly by the next report.
These will be posted.
kind of easy transparency can be worked.
Court conferences will be posted.
That
But I just believe, your Honor, that it is, again, I
just think it is painting a picture of the leadership of the
District Council trying to squash ideas when it is actually
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:
THE COURT:
Nice to see you all.
COUNSEL:

You bet.

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1

UNITED STATES DISTRICT COURT

UNITED STATES OF AMERICA,

90 Cv. 5722 (RMB)

DISTRICT COUNCIL OF NEW YORK

October 17, 2016

HON. RICHARD M. BERMAN

CROWELL & MORING, LLP

SOUTHERN DISTRICT REPORTERS, P.C.

WILMER CUTLER PICKERING HALE & DORR, LLP

SPIVAK LIPTON LLP

HOLLAND & KNIGHT

McELROY, DEUTSCH, MULVANEY & CARPENTER, LLP

SOUTHERN DISTRICT REPORTERS, P.C.

So, nice to see you all.

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

that have been pending here for some time.

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

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

with the person next to you.

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

We have some open issues there.

will go to the District Council, more centered on District

So the first issue with respect to the benefit

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

benefit funds, is that right?

Yes, your Honor, they are here.

new CFO, Bert Lesniewski --

Are they here?

The new executive director, David Stewart; the

And new chief compliance officer is

Allan Bahn, right there.

SOUTHERN DISTRICT REPORTERS, P.C.

high-level shift, one might say.

And when did you start?

I can address a little bit that and

obviously counsel for the funds is here.

The prior executive director, your Honor, left, I

believe it was in April of 2015.

for the job to be the new executive director.

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

there is both an executive director and now a chief financial

So there was an interim

During the course of the year that followed,

There are so many employees and so many

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

have trouble remembering who all is doing what.

We haven't even gotten to the District Council.

Counsel for the funds may be able

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

I am trying to figure out.

SOUTHERN DISTRICT REPORTERS, P.C.

director, taking over that position from Regina Reardon, who

had been the interim for the prior year.

The new position is a chief financial officer, which

fits well with Mr. Lesniewski's experience.

chief financial officer.

So there was never a chief financial

They can address this better than I can.

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

separate positions, and it was a single executive director with

And the third person is a chief compliance officer,

which is not a new position, but newly filled.