1 1 1 2 2 3 4 4 5 5 6 6 7 7 8 8 9 9 10 11 11 12 12 13 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 D2RTUSAC UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA, Plaintiff, v.

DISTRICT COUNCIL OF NEW YORK CITY and VICINITY OF THE UNITED BROTHERHOOD OF CARPENTERS and JOINERS OF AMERICA, et al., Defendants. ------------------------------x New York, N.Y. February 27, 2013 9:20 a.m. Before: HON. RICHARD M. BERMAN, District Judge APPEARANCES PREET BHARARA United States Attorney for the Southern District of New York BY: BENJAMIN H. TORRANCE Assistant United States Attorney FITZMAURICE & WALSH, LLP BY: DENNIS WALSH Review Officer - and MINTZ LEVIN Attorneys for Review Officer BY: BRIDGET ROHDE SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 90 Civ. 5722 (RMB)

2 D2RTUSAC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 16 17 18 19 20 21 22 23 24 25 APPEARANCES CONTINUED DECARLO, CONNOR & SHANLEY Attorneys for New York City District Council of Carpenters BY: JAMES MURPHY McELROY, DEUTSCH, MULVANEY & CARPENTER Attorneys for Wall Ceiling Association BY: MARK A. ROSEN HOLLAND & KNIGHT Attorneys for Building Contractors Association BY: LOREN L. FORREST JR. KAUFF McGUIRE & MARGOLIS LLP Attorneys for District Council Fringe Benefit Funds BY: RAYMOND G. McGUIRE LAURA KALICK, Fringe Benefit Funds Interim Executive Director KWAME PATTERSON, District Council Director of Communications JULIE BLOCK, Carpenter Funds Chief Compliance Officer STANDARD DATA CORPORATION BY: ANTHONY ANDRETTA

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

3 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (In open court) THE COURT: Let me just say a word or two about the technology. We have had some back and forth over the last couple of days, and I didn't really give you -- there was no opportunity to explain what my thinking was. It strikes me that with respect to the implementation of this new collective bargaining agreement, what you all are proposing is a companion technology that goes towards implementation. And I think that's pretty much up to you. In some respects it strikes me as a little bit of a tail wagging the dog. The dog is the collective bargaining agreement. What's new about it? We have been talking for quite some time about collective bargaining agreements. I remember Mr. Conboy saying last year that they were imminent -- I think over a year ago there were going to be a whole series that didn't happen. I don't think there's been a whole lot of discussion about why it didn't happen or when it is going to happen, but I'm frankly more interested in the collective bargaining agreement itself, the new one, and somewhat of a discussion about the change to rule of full mobility than I am in what particular technology you all are going to employ in connection with that agreement. And it strikes men as to the latter -- and I'm happy to hear the proposal and see it as well to some extent, but in terms of the feasibility of any particular technology, that's SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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4 D2RTUSAC pretty much up to you all, as long as it works, whether you use iPhones or Samsung or whatever, that's really your call. The issue is -- and that I think you're only going to know over a period of time how well this new technology helps implement the collective bargaining agreement. So that's where I'm coming from. I also want to hear about the funds. I haven't heard a presentation in quite some time about how the funds are doing. That's really another meat and potatoes issue, as well as the collective bargaining agreement. One thing that we never talked in depth about is what premise return on investment those funds use as a benchmark or as an estimate from year to year, whether those are realistic or not, and whether in fact those returns are being made. So I'm interested in that and certainly also interested in hearing -- and you're, I take it, going to describe web site as well as another topic. So that I hope offers you some background or some explanation of why I start of tamped down the technology presentation. But with that, I'm happy to begin. I think we have allocated 10, 15 minutes for each of the major topics. If I missed any, I'm sure you'll mention it. MR. MURPHY: James M. Murphy for the New York City District Council of Carpenters. If I may, just preliminarily, your Honor, there are SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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5 D2RTUSAC two items that were presented to you at the last status conference. I just wanted to give you an update on those items. The first one had to do with the MWA matter and Arbitrator Townley, as you may recall. She has now issued, back on January 22nd of this year, her remedy award. And she limited the -- followed some of our direction, I think, and limited the remedy to $8 million down from the $59 million that the MWA employer association was claiming. Since then, the district council has been in negotiations with MWA about paying the remedy amount, as well as we have preliminarily negotiated a successor ten-year collective bargaining agreement that both sides are at least satisfactory with. It provides for reopeners with interest arbitration and other matters, so giving back a little bit. THE COURT: When you say "giving back," what is the doable proposition, if any, with respect to that? MR. MURPHY: Yes, your Honor, we were looking at, given her a liability award that was issued last May of a claim by the employer association, MWA, of $59 million in retroactive damages, and the arbitrator insisted that we brief the issue of remedy. We did so, and she then limited the remedy to going back to just a certain amount of time as well as completely deciding that she did not have the jurisdiction to address the issue of the benefit fund. So that the damages remedy is SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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6 D2RTUSAC limited to $8 million retro to 30 days prior to the filing of the grievance, which was back in July of 2011, rather than retroactivity to August 1st of 2009. THE COURT: And so you mentioned you're negotiating that still? MR. MURPHY: We have tentatively agreed to a new ten-year contract, a successor agreement, to replace the one that expires by its terms this June 30th. We have agreed to other matters that would also include the district council paying the remedy that's been awarded by Arbitrator Townley, which is $8 million. There are issues, and maybe Mr. McGuire can speak to the funds involved in litigation in front of Judge Batts and in front of Judge Stanton with the MWA, and the MWA is -- I think the funds in the union are looking for some sort of global settlement of all these disputes. The other one is the retirees' lawsuit that's pending in front of Judge Oetken, and the retirees have filed a partial motion for summary judgment. We will be filing our own motion for summary judgment, as will as the funds, scheduled to be filed next Friday. The retirees are looking -- as you may now, there was a system in place since 1982 called the blue card system in which union dues pursuant to check off authorization cards were deducted from the vacation amounts that were distributed to employees from the vacation fund. They were SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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7 D2RTUSAC distributed on a quarterly basis. That system has been put -- we put an end to that system. The district council, since the early last summer, has been collecting its dues directly, and we're negotiating in collective bargaining agreements, including the one with Wall Ceiling, standard dues check off authorization procedures so that the dues amounts would be deducted from employees' wages and remitted to the district council on a regular basis; just the way the funds contributions are. One of the legacy issues that the blue card lawsuit highlighted was that for all the time that the blue card system was in effect, the union never paid any administrative expenses to the vacation fund, which then was merged into essentially the individual account plan into the district council's welfare fund. So the district council has it's outside accountant do an audit report and study, and they determined over the last six years -- the statute of limitations -- that the amount of administrative fees with interest came to slightly more than $1.7 million. The district council a few weeks ago, through the executive committee and the delegate body, approved the payment of those administrative expenses with interest. So that is a non-issue any more, that that problem within that lawsuit has been cured, as we see it. And we think, and I believe the funds believe that the motions for summary judgment will be SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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8 D2RTUSAC successful and that that lawsuit will go away. THE COURT: Did you say with respect to the other lawsuits that are pending that there is an effort to resolve them all globally? MR. MURPHY: The other lawsuits were brought by the district council benefits funds against various MWA employees for delinquent contribution. And I think Mr. McGuire can speak to that. But I think that the funds as well as the union as well as the MWA and its member employers are looking for some sort of global settlement, especially to have the stability of a new ten-year collective bargaining agreement to help that troubled industry. If you want, we can go into the full mobility. The first contract that was negotiated with the largest multiemployer association, which is the Wall Ceiling Association, they want it, and they got and paid for full mobility, which I hope that I explained adequately in my December -- sorry, February 13th letter to the Court. THE COURT: I'm pretty sure I understand the idea. What I don't understand is a little bit of the history of what's happened. There were several agreements pending, as I said before, over a year ago, and Judge Conboy was describing them and saying they're imminent to be approved, and I guess they were not approved. Right? MR. MURPHY: Only one was approved, it's with a SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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9 D2RTUSAC smaller association that does the sidewalk bridges, does the elevators on construction sites, safety netting, that sort of thing. That was approved. But all the other contracts were rejected by the rank and file. When a deal was reached on August 22nd of 2012 with Wall Ceiling, that deal, along with compliance piece of it, which was an addendum that we provided a copy to the Court, was ratified by the union's executive committee, and that same night, August 22nd, 2012, was ratified by the delegate body. And it provides full mobility, but it also provides for what we think is a multifaceted compliance program that the district council, in conjunction with its own inspector general, in conjunction with the government, in conjunction with the Review Officer Walsh, have been put into place. And a lot of the delay since late August has been trying to put those pieces together, get the right hardware, get the right software, do the training. And we believe now that we would be prepared, with the Court's permission, because what this will involve the Court modifying an order from 2009 on the hiring procedures, to be able to go live with this, have full mobility as well as have the compliance and electronic data -THE COURT: That's the part I didn't quite understand, and still don't exactly understand. So obviously the big change relates to the substantive issue of full mobility, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 D2RTUSAC right? MR. MURPHY: Right. THE COURT: So this is a contract that will changes existing procedure, practice, and in fact orders of the Court with regard to that. Correct? MR. MURPHY: Correct. THE COURT: So that's really, as I say, the meat and potatoes here. The technology is a way that you're going to help implement that system, but that doesn't go to exactly the merits of the full mobility. So just is explain a little bit more about the issue of full mobility. I guess it's clearly one that employers were bargaining for and seeking, and for which now there is a collective bargaining agreement that adopts that principle, is that right? MR. MURPHY: That's correct, your Honor. THE COURT: Is that what the hold up has been, so to speak, in reaching agreement, or are there other issues as well that had to be overcome? MR. MURPHY: The issues that really had be overcome were the compliance issues, because there was the fear. I think to its credit on the part of the association, Wall Ceiling as well as the district council's leadership, the review officer, the government, and the district council inspector general, that with full mobility, that is, the employer being able to select all of its work force except for SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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11 D2RTUSAC the certified shop steward, who is assigned from the out-of-work list, that the prospect or the possibility or the opening for corruption, like in the bad old days, was there. So there was a really concerted and almost overwhelming effort to put into place a multifaceted compliance procedure of which the daily reporting by the shop steward, and then reporting those hours to the employer on a daily basis so the employer can check it daily, as well as the employer, has a week after the close of the payroll week to contest anything that's been reported by the shop steward. Also rank and file members would be able to go on and check any job that they have been on, which shows -- will allow them not only to see themselves and their own hours, but see the other people working, the other carpenters working on job and their hours, so the members themselves are part of the whole watchdog component of this. Plus there are initiatives by the inspector general's office to hire retired carpenters to go out and do spot checks obviously on the big jobs, but especially on jobs where there won't be shop stewards assigned, one- and two-person jobs, to make sure they're in compliance under the collective bargaining agreement, because that's a new thing under the collective bargaining agreement, and to make sure there is not other untoward things happening in relationship to the hiring and how people are being paid and how hours are being recorded. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

12 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Isn't it fair to say, though, in terms of the efficacy of the implementation, you all are not going to know with certainty until after a certain period of time when the system is in place, in play and working, whether it is effective, isn't that right? MR. MURPHY: That's correct, your Honor. THE COURT: You haven't done it yet. MR. MURPHY: We have done it. There's been a trial that's gone on for several months now involving six contractors. All reports are that the system does work. Obviously when we roll out a much larger basis, we presume there will be some problems. Part of our back-up system that we have is we're going to have people at the district counsel available through a toll-free number that will be distributed so if someone doesn't have it, or even an employer themselves can call in the hours. That will be available seven days a week, so it's even able to pick up Saturday and Sunday and holiday jobs. So we're putting together this comprehensive program. As it rolled out, I think we'll see what additional programs there are, but so far the electronic reporting component of it appears, from all reports, to be working. THE COURT: When you say -- and I read your materials -- your test run, explain that. Is that a real or is that a test, as it were? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

13 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. MURPHY: It was actual live of having the shop stewards out in the field, as I understand, report the hours in, and then conveying those hours to the employer, to the foreman, to the time keeping people, to make sure that everybody is on the same page. But one of the things that we're concerned about is whether or not they would be able to do this communication out in the field. THE COURT: OK. MR. MURPHY: If you want, Mr. Andretta from Standard Data is here. THE COURT: Before we get to that, I would still like to know a little bit more about the status of the other contracts and where they are in the scheme of negotiation. There were four or five all together? MR. MURPHY: Yes. There's a tentative agreement, the details of which have been posted on the district council's web site, with the building contractors association, which is a large association with some overlap of membership with Wall Ceiling. But there's a number of fairly large general contractors that are members of the building contractors association. They would provide, as I understand it, for the same full mobility. Instead of being a contract -- it would only be a three-year contract, because they have issues I think internally, that association, between the smaller members and their larger general contractor members. They're ongoing SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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14 D2RTUSAC negotiations. My office is not involved with them. They negotiate without counsel with the general contractor's association, including dock building, heavy highway construction, and the like. I understand they're fairly close do reaching an agreement. We are, to be honest, at loggerheads with the cement league over a lot of what provisions have been agreed to, but there is not an impasse but there's a spirited disagreement on the issue of market recovery rates with them. And given all these negotiations, the negotiations for the floor covers association has been on hold, and we have not met with them except, I understand, informal contacts with them for a number of months now. THE COURT: Does that mean, with respect to the -other than the Wall Ceiling contract, relations continue under the existing -- whatever the existing agreement until such time as there is a subsequent agreement? MR. MURPHY: Yes, most of those agreements expired by their terms on June 30, 2011. And there's been a series of continuation agreements where the money contributions are made into the funds and everything is held in place as negotiations continue. So there's been no disruptions of work or anything like that. THE COURT: So why don't you just spend a minute on the issue of full mobility, what it was, for the record, and SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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15 D2RTUSAC what it is now in this proposed agreement. MR. MURPHY: Well, what it was under the Court's 2009 order is that at least 33 percent of the hires for a job had to come from the district council's out-of-work list, stated clearly. Now with this change, no one will have to come from the out-of-work list except for the certified shop steward, and that's on obvious anti-corruption effort that the union is insisting upon, and the association didn't have a problem with that. THE COURT: And the 33 percent was a negotiated figure as opposed to 40 percent or 60 percent or some other number? MR. MURPHY: It was, as I understand -- it was before my time -- it was semi negotiated, and it was imposed by Judge Haight in his order of May 26, I believe it was, 2009. THE COURT: How did he know to pick 33 percent versus some other percent? It must have been a recommendation. MR. MURPHY: There were negotiations and new contracts entered into in the early 2000s without, as at least as I read the record, the knowledge or the approval of the government, and so the government brought a contempt proceeding because it believed -- as it turned out from the Second Circuit, it was correct -- that it was a violation of consent decree. Judge Haight disagreed, the government appealed to the Second Circuit, the Second Circuit agreed with the government, and it was remanded back to Judge Haight, and he issued a final order SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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16 D2RTUSAC in 2009 of judgment of contempt. THE COURT: Which includes now the 33 percent? MR. TORRANCE: Yes, your Honor, Ben Torrance for the government. It was a litigated matter. As I recall it, Judge Haight essentially reached a compromise as his contempt remedy exercising the equitable power of court instead of 50/50 or 100 percent, he came to 67 percent. THE COURT: OK. So now explain -- if you could introduce the technology, what it's designed to do, and how it relates, so to speak, with full mobility. MR. MURPHY: What's it's designed to do is to provide the union and the funds and the employer with daily feedback as to who was on the job in a way far more accurate than the more traditional paper shop steward reports which were done on a weekly basis, and historically were, I guess to be charitable, very problematic. And this is a method of what we think is a more foolproof method to make sure that the time and the hours and the pay and the contributions are based upon what job classifications people are working in and the hours they're on and under what the collective bargaining agreement and then reported to the funds. So the funds have up-to-date information as to what is owed in contributions, and the employer is has up-to-date information. And rather than waiting possibly many weeks or months or years to reconcile accounts and wait for a fund audit of an employer -- not that SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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17 D2RTUSAC those are going to go away -- but to provide all parties concerned with much more accurate as well as speedy information. And so if there's need for reconciliation, it could be done very quickly. THE COURT: What would be theoretically some of the abuses -- where could the corruption come in if, for example, you didn't have accurate records as to who is working and how long they're working at a particular job site? MR. MURPHY: The possibilities of corruption would include the shop steward reporting people and hours and the contractor disputing it saying that not all those people were there. And because some of them were -- I don't know, there's some arrangement with somebody to pay them in cash, for instance, so they're not supposed to appear. If there's an issue with the shop steward being involved in a system like that, then we think that eventually, with the other compliance efforts and members themselves being able to look on or some members saying: Wait a minute, there are ten people on this job and they're only reporting five, what's going on here? I have been working on that job the last week. They can call the review officer or the inspector general's hot line and they can send people out. We will have roving groups of retiree carpenters working for the inspector general. The inspector general has his own crew that does spot checks and surveillance of jobs, et cetera. So it's a multifaceted effort. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

18 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 And I think one of the key things is the ability of rank and file members to actually look at the jobs they were on. They try to go on and they find that they can't get on, see anything on a job they were on, they know there is something going on, that their hours aren't being reported or aren't being reported accurately or they're not even being reported, they just disappeared. Likewise, if somebody is on a job and they know all the ten people on the job and they go on the system and see that there's 20 people on the job, then you may have a system where people who are being ghosted on the job in order to get benefits even though they're not actually working. THE COURT: So are those some of the abuses, who is working or who isn't working, as to whether or not there are adequate deductions for benefits down the road or whether people are getting benefits who in fact don't deserve to get them? MR. MURPHY: All of those, your Honor. THE COURT: And who is being selected to work in the first place, is that -MR. MURPHY: Who would be selected to work in the first place would be up to the contractor. The contractor -under the new system, the contractor is going to be able to choose everyone who is going to work for them on a job except for the shop steward. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

19 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Whereas before you could choose 66 percent roughly of the work force, now he gets to choose a 100 percent. MR. MURPHY: That's correct. MR. TORRANCE: May I add a little context? THE COURT: Sure. MR. TORRANCE: One of the reasons that this is a corruption issue, one of the historical patterns that we observed was a corrupt contractor wanting to seek to cut his costs, wanted to pay them cash, not pay benefits. What they often did was, with the union leadership, would agree to turn a blind eye to that, so there's a probably an exchange of cash there. Sometimes that arrangement was facilitated by La Cosa Nostra. So part of that -- all of that goes into the historical pattern of corruption that we observed as part of our RICO case. So workers were working off the books working for cash, the contractor benefits by cutting its cost, the corrupt union leadership would get some kind of compensation. THE COURT: Kickback. MR. TORRANCE: Kickback. And the funds were defrauded. THE COURT: Is that the central abuse that you observed historically? MR. TORRANCE: I would say in the time that I have been on the case, in the time since roughly 2000 -- since the ownership of Mr. Conboy ended, that in my experience has been SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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20 D2RTUSAC the primary type of abuse, yes. There are historical examples before that of different types, but in recent years. THE COURT: OK, thanks. Now Mr. Murphy, we were -- now you want to demonstrate how it is and what technology you intend to put in place, which we had some trial runs on, to ensure transparency is really what this is all about, as to who is working on what jobs for what time period. MR. MURPHY: That's correct, your Honor. So what Mr. Andretta can do is show you what a shop steward would be seeing and entering, what a rank and file member could then check to see what they would be entering, and what the employer will be seeing and have reported to them so they can also check. THE COURT: And then you will also briefly describe, as you have in your materials, in the event of dispute or disagreement as to what mechanism is in place through arbitration or whatever to resolve. MR. MURPHY: Yes. MR. ANDRETTA: I won't go through the flow because Mr. Murphy sort of explained how the flow works. So the shop steward will go into a web-enabled site through the tablet that he's issued by the district council. THE COURT: So he'll have the tablet on the job. MR. ANDRETTA: Correct. And he's responsible for that SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 D2RTUSAC tablet. So he puts in his UBC ID and password, and what he gets is a list of all the job sites that he is working on. As you can see here, you can see the ones -- most of them have been already submitted, the one on 13th is an open one. So what we have done is we will take all the hours that were worked yesterday by let's say ten men, and we'll bring them over -- in this case, three men, we'll bring them over to today. Now if he has to remove some because they left the job site, he can remove them by checking the box on the left-hand side. You could see where he could enter the new hours. He said in this case yesterday, Mr. White worked eight hours, he was the foreman, Mr. Herman worked eight hours, he was the shop steward, and yesterday Henderson who was on the job may have been out that day, he may have been out sick. So yesterday there were three men on this job and they worked a total of 16 hours. So he could either reset these hours to zero if he wanted to reenter them, or just go in and make the changes to these hours, and if he needs to add a new man, he can put in the UBC, another man comes in the job new, he puts in the UBC number, and if we find that man on the membership system that we currently maintain, it will bring that person in and he could actually put the ten hours in for that person. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

22 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 He does the same, and you will see that Joe Ono was added to the report with ten hours. But again, Mr. Henderson didn't show up today, so he did not pay his hours. So a total of four men working 26 hours today. He will hit click to submit this report. Once he submits that report, an e-mail is sent to the representative identified as the contractor. We maintain all these email tables provided to us by the contractors and by district council, because there's also email lists we'll get into as we get into the member portal for the business agents, the business managers, the IG's office and review office. So we'll get to that. So someone at the contractor now who has been assigned to handle this receives an email. In that email is a link. All they do is click that link, and it brings them up to enter their contractor ID and, again, password. What that person sees then is the reports that have been submitted by the shop steward for that particular employer. Now in this case you'll see there's multiple job sites for this employer. So this employer is going to -- he sees all these jobs have been submitted by the shop steward. If you notice on the right-hand side, the contractor has not reported on these yet, so it's up to the contractor now to get from February 10 through February 17 and check all these hours and either -- he can either approve them, he calls the first SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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23 D2RTUSAC one up he sees her, he could either approve it or dispute it. He has to be sure he wants to dispute this report. If he does, it will open up the screen again and it gives him the ability to enter the contractor's hours that they worked for that particular day. THE COURT: So he does a parallel -- the contractor has a parallel process or person who also monitors the job site and determines whether the hours put down by the shop steward were correct and whether the individuals that the shop steward says were on the job were in fact on the job? MR. ANDRETTA: Correct. THE COURT: Would that be something common, they would disagree who was there and who worked? MR. ANDRETTA: Typically what would happen in most cases is somebody left early and the shop steward didn't know about it, so he put in eight hours. If you notice, on the first one, White, the shop steward put in eight hours, but when the contractor came in he said six, and you will notice the reason code he gave is one, which is he left work early due to illness. Because why should -- the contractor is not going to want to pay eight hours in terms of benefits if the man only worked six hours. So that information is entered, then it's updated. And you will notice again we have four men on the job for the day, shop steward entered a total of 26 hours. The contractor SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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24 D2RTUSAC entered 24 hours. Once the contractor hits "return," that's a disputed report, that goes on an email distribution list, it goes back to the shop steward. Whether it's approved or not it goes back to the shop steward, it goes to the district council, and from there they start to resolve the dispute resolution, and that's something that we're not a part of. So we just do the notifications. THE COURT: I hear you. So could the shop steward resolve the dispute himself if he talks to the employer and says oh, yeah, I didn't realize somebody left for two hours earlier yesterday, you were right, and so does he do that or does the district council do the reconciliation? MR. MURPHY: Our anticipation is there would be a discussion with one of the staff representatives with the shop steward saying there's a dispute, what happened? Did the person really leave? And if you want to check, the individual rank and file worker could call the staff rep and say yeah, I did leave early, I was sick or had to leave early for a child. So we're looking at things could be worked out informally, which is the way that most grievances are worked out, but we could talk later about if that doesn't happen. THE COURT: OK. MR. ANDRETTA: There are different levels as well. At the end of one week we produce a report that shows the differential in hours for each day during that week and total SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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25 D2RTUSAC them up. And then there is -- it's in the compliance document that we were provided where there's a level one through level three, less than 25 hours it goes through a distribution list here. I'm sure you're familiar with that. So again it's all about email distribution. If there's a difference in the number of men, the actual head count, that goes directly to level three, which is the highest level. Then he's asked if he wants to approve the report, and the report goes through. The watchdog. This is what Mr. Murphy was referring to as now the member. The member will have access from his home, wherever he has internet access, he can put in his UBC ID and password. That typically will be the same password for the district council web site. In this case I will show you what the IG's office can see. The IG's office -THE COURT: Go back to the member for the moment. So the member would be able to -- he might be concerned that the number of hours that he actually worked were not reflected in somebody's report, and so that would impact his compensation and his benefits, et cetera, et cetera. So he has access to this information. MR. ANDRETTA: He has access only to the job sites he worked at. You will see a whole list that he can scroll through to find a particular day if he has any doubts about it. Then he clicks on that particular day and job site and it SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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26 D2RTUSAC brings up the report for him. THE COURT: When you say, Mr. Murphy, there have been trial runs, and I understand there have, what does that mean? This very system and workers have logged you on and determined and confirmed the hours that are reported to them by a shop steward or what? MR. ANDRETTA: No, the member portal hasn't been opened it the members yet. THE COURT: What has been the test? MR. ANDRETTA: We worked with the IG's group, and we were reporting to them the discrepancies that existed, and I guess they were dealing with them. So the members get the screen for a particular day on the job site that he worked. He checks it. And he could either hit "return" and go back to that list, or he could contact the inspector general's office, as you could see. And what he does -- it brings up a screen for him that he could put his phone number in. We populate the phone number based on what's in his membership record. And then he could put comments that get sent to the inspector general's office. So if he wants to be contracted by the inspector general, the inspector general will follow up with the member. THE COURT: In his comments he says that on February 23rd I worked eight hours but only reflected six. MR. ANDRETTA: Right. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

27 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Now we also provide to the inspector general's office, they could see any report at any time for any job site. But what we did is provide them with filters so they could scroll down to exactly what they're looking for. So that's a small part of the system for the member portal as well. So the inspector general can see pretty much everything. It says: Are you sure you want to contact inspector general? That's when you get that screen to fill in the information. And that's pretty much it. THE COURT: I got it. Mr. Murphy, this system replaces a -- I'm guessing because I don't really know -- a manual system, a paper system? MR. ANDRETTA: We currently manage that system, your Honor. It is a paper-based system. We redesigned the form about five years ago where it could be scanned in and captured the data electronically. Then we took that data and matched it to the funds information, because we captured all the remittance that comes in from the benefits reported to us. Interestingly enough, when we started all this, the report was thick, the difference between what was reported by shop steward and paid by benefits, by the employer. But within a few months we had the report down to this much because we were catching the differences that existed. So what would happen is the problem with the paper reports, even though we redesigned the form, they were still handwritten and still a SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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28 D2RTUSAC lot of mistakes, and there was no way -- by the time the shop steward got it to us, it was week later, because it had to be reported to the union office and the local office. By the time it got to us and scanned and got matched, it was on a monthly basis, so we were already a month into it. So this brings it has down to a daily level so we can capture the information immediately. THE COURT: Got it. MR. MURPHY: If there is a dispute and it can't be resolved informally, then it goes through the grievance and arbitration process. THE COURT: "Informally" meaning what? The shop steward confers -MR. MURPHY: Along with the staff rep, along with the foreman, along with perhaps the person who is doing the bookkeeping with the particular contractor to see what is going on, if there's been a mistake. THE COURT: I get that. How does that manifest itself? Suppose the shop steward says I agree, it should be eight hours instead of six hours, is there a subsequent email or that gets -- where does the record that -MR. ANDRETTA: From my understanding, this could only get resolved with someone from the district council involved in the matter. It just be resolved between the contractor and the employer. Once there's a differential reported, the district SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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29 D2RTUSAC council is getting an email to make them aware that they have to be involved in any resolution in that dispute. THE COURT: Who does that? MR. MURPHY: The staff representatives would do that. Then there would be an email trail showing that back and forth, that resolution on. THE COURT: And so that's the informal resolution that there's a final, so to speak, email that reflects agreement between both the employer and the union and the employee. MR. MURPHY: Right. That would be our understanding, is that could be, if necessary, tracked down to see what was going on if questions were raised later on. If there are issues that can't be resolved that way, then it can eventually go to grievance and arbitration procedure. And one of the -- part of the compliance pieces, I think enumerated number four in my February 13 letter to the Court that the employer association agreed to is that if -it's not a strict liability mechanism, but if an arbitrator determines after a full hearing that what I'll call sort of the contractor has the mens rea and then the actus reus to violate the collective bargain agreement, the arbitrator would be empowered to issue an award that they are no longer able to use full mobility, and they would have to use a system where they could hire 50 percent and the other 50 percent would come from the union's out-of-work list. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

30 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: So we'll come back to that in a minute, because I take it that is somewhat of an issue in the proposed stipulation and order which you suggest, that a return to the out-of-work list usage is somewhat controversial. But before we get to that, how does the arbitration process compare with what is done today? MR. MURPHY: It will be the same. We have contractor arbitrators that would be designated in the bargaining agreement. They operate on a rotating basis and schedule a grievance arbitration on it, and the two sides present their evidence, their witnesses, and the arbitrator issues an opinion and award. THE COURT: So I'm interested to know, "arbitration" sounds like a big process, as it were. I take it arbitrations are not for a dispute over two hours, or are they? MR. MURPHY: If it could not be reconciled or even compromised -- and this would be at the highest levels of district council, and we contemplate even involving the inspector general's office, if there's a knock down, drag out fight over two hours, you would look to avoid arbitration on that, and see what could be worked out. That would be with the member, with the shop steward, with the staff rep, with officials above the staff representative, as well as counsel for the district council, counsel for the contractor, the contractor principal, if necessary, to see what could be worked SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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31 D2RTUSAC out to avoid arbitration. THE COURT: So I suppose that takes care of most problems, or not, this informal process? I'm trying to figure out what is left for arbitration. MR. MURPHY: In the near term, historically, most things get worked out. Claims get compromised with the consent of the individual worker. There's an issue of pay, hours, whether you worked on a holiday, that sort of stuff, but that stuff is reconciled. Oftentimes the records are all gotten together, the worker is just wrong or the shop steward was wrong or the employer was wrong, and therefore, pays the money. The arbitrations are generally -- I wouldn't say they're rare, but it's not a very frequent thing that goes on when you have to have a grievance arbitration. THE COURT: If the kinds of issues are I went home sick -- I don't know, that's what I'm trying to get a sense of. MR. MURPHY: This is an effort to cut down on that. MR. WALSH: Your Honor, Dennis Walsh, the review officer. I want to emphasize the importance of a record being made and distributed to multiple people of every quote, unquote, informal resolution in the grievance phase. Our experience has been in years past that that is a very fertile area for corruption where things are basically forgotten and tossed into the garbage. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

32 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: So if somebody works it out, so to speak, you don't have a process. MR. WALSH: Right. There needs to be formal reporting, redundant reporting to the inspect inspector general, to my office, to counsel. And it's the redundancy in the reporting that ensures there's no shenanigans in these settlements. THE COURT: So even as to whether I was there four hours or eight hours, and someone comes up and says well, it's four or they say it's eight, you want to know how they got to the eight, the basis for it? MR. WALSH: Well, I think most importantly the affected workers need to be informed by formal system as to what the resolution is so they can actually serve as witnesses if there's any corruption in that resolution. So I think email is an effective way to do it with some sort of standard formatting with distribution to affected parties and to my office and the inspector general and counsel. THE COURT: So are you comfortable with the system as proposed with the fact that the worker can log in? I guess that person is the best check. MR. WALSH: That is the most important component of the system, your Honor. In years past -- and Mr. Torrance referenced this -La Cosa Nostra did control corruption. The easiest way to do SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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33 D2RTUSAC it would be to pay a large number to a gangster who would then guarantee safe dealings with the union. Money would be distributed down to business agents and to shop stewards. In other contexts employers on the first day of the job would seek out the steward and say look, it's a hundred dollars a name per week for every name that you leave off the shop steward report. So the ability of the member who is on that job to anonymously call and report any suspicious of corruption is the cornerstone of this system, and it's really unprecedented, in my view. THE COURT: Got it. So what's the plan, as it were, with the roll out, are you going to do it in phases? MR. MURPHY: The labor management committee has very graciously allocated or granted one million dollars to purchase a thousand of the instruments, and they will be a thousand dollars apiece. And they're guaranteed for six years, tech support, parts, replacement. And shop stewards -- the shop steward class is being offered every day this week, and the devices are coming in. We would like to start the roll out on next Monday, March 4th. If people don't have devices or somebody leaves their device at home then they have an 877 toll free number to call in where they will be staffed into the evening, and also be staffed on weekends. And when shop stewards call in, give their UBC number, who they are, and then there will be SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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34 D2RTUSAC personnel at the district council to take that, the oral reports over the telephone to enter that in, and then the shop steward email and confirm that as a back-up while we get this going. And we're told by the company that every single week there will be an additional between 50 and 100 devices coming on line. We're just starting with this one contractor now. We estimate, and I think the association estimates that at any one time they may have between 250 and 300 jobs active on a daily basis, so we hope to be in a position to cover all of that beginning March 4th but also have the telephone back up for that roll out as well on an ongoing basis in case somebody forgets or that you don't have a shop steward on a one- or two-person job, that can be called in either by the employer or called in by individual workers. And they would have to go through the same system of being able to check on their own hours and who else reported with them. THE COURT: So what is your estimate as to when this system would be fully or likely to be -- what time period? MR. MURPHY: From what we're told by technology people, about the third week in March. THE COURT: Every job, every steward. MR. MURPHY: But obviously with the technology and the delivery of the devices there's a possibility of glitches. THE COURT: I would imagine. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

35 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. MURPHY: But we put in safeguards for that with being able to report by telephone. THE COURT: Got it. I should have asked before, is this system used anywhere else? MR. ANDRETTA: No, it's not. It's a customized solution. THE COURT: Is this a technology used in other locals other jurisdictions? MR. ANDRETTA: No, to our knowledge this is the first of its kind. THE COURT: So the more prevalent system would be what, the paper system? MR. ANDRETTA: Typically, yeah. THE COURT: Forms, et cetera. MR. ANDRETTA: It's interesting, I spoke to a union out in LA last week and talked about this, and they had never heard of anything like this either and they deal with shop stewards as well. And they're very interested in following up with something like this. I will say that the technology is complete, tested, and ready, so I think what is happening now, what might take the next couple of weeks is the training cycle. The training began on Monday, I think there were 60 contractors there on Monday already, and it went very well. THE COURT: Good. There remains the issue -- you were SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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36 D2RTUSAC saying, you touched on before about the possibility that if there were some willful purposeful evasion of this system, that under the agreement the out-of-work list comes back, so to speak. MR. MURPHY: It will go back to a 50/50 but only for that particular contractor. THE COURT: So explain that a little. That's sort of a stick as opposed to a carrot. MR. MURPHY: Right. It was seen by both the district council and the top level leadership in the Wall Ceiling Association that in order to make sure that people didn't get tempted to do the wrong thing, there had to be the possibility of really a Draconian sanction for that. But there are safeguards, as I mentioned. It's not a strict liability statute, say with an industrial polluter or something like that, but you have to -- the district council would have to be able to demonstrate by the evidence that this was somebody who knew what they were doing, were intending to evade the system, and took steps to actually do that before the arbitrator would be authorized to impose such a Draconian sanction on them. THE COURT: So that would be -- I would imagine it wouldn't just be a discrepancy between six hours and eight hours on one day for one worker, right? That is probably something more serious than that. How realistically could this ever come about or could this come about? What's the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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37 D2RTUSAC contemplation? And would the return to 50 percent out-of-work list use be temporary or forever? MR. MURPHY: It would be for that contractor for the duration of the collective bargaining agreement. THE COURT: For the entire contract for all the job sites. MR. MURPHY: For that contractor for the duration of collective bargaining agreement, yes. THE COURT: Explain how that might come about. MR. MURPHY: We have a hard time ourselves thinking that somebody is going to evade the system or attempt to evade the system with all of these safeguards in place and with the members being able to log on and with the review officer's office being able to be involved are the inspector general's office being able to be involved. But if there were a pattern of abuses where sort of like you caught me again kind of thing, I could contemplate that maybe after the 10th time that we caught them or something that the district council would say that this is ridiculous, you only -- this is only happening when one of our retired member inspectors come on or we got people blowing the whistle on you, that sort of thing. If you play a catch-me-if-you-can kind of game, we need to do something about that. THE COURT: And this is the subject of an arbitrator's ruling -SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

38 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. MURPHY: Yes. THE COURT: -- whether or not it rises to a particular level. MR. MURPHY: Yes. THE COURT: And as a remedy, the arbitrator determines that we go back to 50 percent out-of-work list for this. MR. MURPHY: Correct. THE COURT: Got it. OK. Thanks. Yes, sir. MR. ROSEN: Good morning, your Honor, Mark Rosen for the Wall and Ceiling Association. At 8:35 last night I received an email of what I presume to be the current draft of the collective bargaining agreement. THE COURT: I think I got it the same time. No, I think I got it this morning. It was probably delivered to the building, but I got it this morning. MR. ROSEN: I just want to clarify that that draft has not been agreed to in total. We're almost there, but there are still remaining issues to be resolved. The provisions of that agreement as to mobility and the time reporting -THE COURT: As to mobility and? MR. ROSEN: And this time reported procedure has been agreed to, but there are still other issues that remain negotiation. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

39 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: So what does that mean? Is this coming? I'm more conversant with an agreement that is an agreement as opposed to a partial agreement. MR. ROSEN: Nothing in this situation is common, your Honor, but I would say what it means is the full mobility and the accompanying time reported is the lynchpin of the new agreement. Your Honor's term was meat and potatoes. If the Court approves that, then the parties should be able continue to negotiate in good faith and resolve the remaining issues. But I don't want there to be a misunderstanding that we have a complete collective bargaining agreement ready for signature. THE COURT: No, I hear you, but I'm not exactly sure why that would be the case. It may be an agreement if the hard part is agreed to. When is the rest coming? MR. ROSEN: Let me address the timing first, your Honor. A memorandum of understanding was reached back in August, and as counsel referenced, I think the ensuing months were spent developing this system and getting it up and starting it, and the association was very cooperative in that process. THE COURT: So I understand. MR. ROSEN: It was not until earlier this month that the union said we want to get this implemented by the end of this month, being February. By this time, we did not have a draft collective bargaining agreement, we did not have anything SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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40 D2RTUSAC in writing about the compliance procedures. So the association took the initiative to draft something February 7 that we sent to the union. We didn't get the response until this past Friday. Monday we sat for several hours, met with them, and resolved what I think are most of the issues. There were still communications yesterday about some of the outstanding issues. We didn't get the proposed order that was put in front of you until yesterday. So this is kind of going on an expedited, high-speed basis, and we're doing our best to try to resolve the issues. But there are issues, and some of them are important to my client that still need to be resolved. Now it's my understanding that the collective bargaining process and the specifics of those negotiations are really not under the auspices of this Court. To the extent we have an agreement that varies from the terms of the consent decree, or in this case mobility, prior order of Judge Haight, we do need judicial approval, but for the other specifics I think the parties are free to negotiate and reach an agreement. So I'm a little reticent to get into the remaining issues in dispute at this point, and if the Court directs me to, we will. THE COURT: No, I'm less concerned with what they are than why they're still hanging out there. It's a little bit unusual. It's been a long time. This has been going for a couple of years. Certainly the active negotiation and the collective bargaining agreement, as I said at the outset, I SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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41 D2RTUSAC have been hearing about it's imminent for over a year, two years, perhaps, or maybe a year and a half. So I'm a little surprised that it's not there. But I do understand that the principal features are the full mobility issue and this implementation. I do get that. MR. ROSEN: Given the fact that we received the draft on Friday, I think we're doing very well, quite frankly, to be where we are today. THE COURT: OK. So what's the doable proposition for me in terms of approval, part of an agreement or specific the full mobility aspect of it? MR. MURPHY: The district counsel's position is that all of the provisions to which the parties negotiated and agreed to are incorporated into the new collective bargaining agreement, that is, the MOA that was ratified -- agreed to on August 22nd of last year and ratified by the district counsel's executive committee and delegate body. On Monday, Mr. Rosen raised other issues that I understand from the agreement's negotiators were not raised as part of the negotiations, were not part of the deal that was done back in August. So that's where we are. THE COURT: So -MR. ROSEN: Your Honor, clarification. Any issues I spoke about on Monday were in our draft that was sent to them back in -- I don't want to get into back and forth, but there's SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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42 D2RTUSAC nothing new there on Monday. THE COURT: I'm asking a simpler question, and that is -- the simpler question is what is before me to approve? Is there a collective bargaining agreement or do we have to wait until there is a collective bargaining agreement, or is it a preliminary approval of so much of the agreement that reflects the full mobility concept and the implementation of this technology? I'm trying to determine what you're asking me to do. MR. MURPHY: The union's position is that we think there's a full collective bargaining agreement. Obviously, if -THE COURT: Doesn't sound like it. MR. MURPHY: If the employer association is not willing to sign it as it is now, then there's an issue with that. But on a preliminary basis, given there doesn't seem to be any dispute about the full mobility and rolling out the compliance issues, that an order allowing the parties to do so effective March 4th would seem to be appropriate unless Mr. Rosen has other views with that. THE COURT: What about that, Mr. Rosen? MR. ROSEN: I was answering your Honor's prior question, what can we do today. The order submitted says the mobility provisions and compliance provisions as reflected in the draft are approved. And again, it's our understanding that SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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43 D2RTUSAC that is what needs to be approved by the Court. So we can do that today. I don't see that there's a need to or even really a basis for the Court to approve the entire collective bargaining agreement. As far as implementation goes, I have communicated from the get go it's the association's position we want to have a fully agreed to collective bargaining agreement before these changes go into effect. THE COURT: I would think that, too. When is that likely to happen? MR. ROSEN: We have been negotiating in good faith. We got a lot done on Monday. I think we had some discussion early yesterday that was productive. I think if we continue to negotiate in good faith we could get this resolved. Our association is continuing to work towards this target, implementation date, and if we can get this done, we will get this done. THE COURT: Mr. Walsh, do you have a thought about that? MR. WALSH: There's a provision in this draft order, your Honor, which I think is material to whatever ruling you issue. I have always viewed your first ruling in this as a provisional order subject to some verification from every source that the system works, that it achieves everyone's objectives, that reduces the likelihood of corruption. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

44 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: For sure. There's no way that we can say that at this stage even if there were a fully embraced collective bargaining agreement. MR. WALSH: I think what is front and center as the main issue of the parties is where do they stand if in 30 or 60 days I recommend to the Court this system be abandoned, that it doesn't work. And I thought in my own view all along that the contract would be a nullity at that point, because it is found and the quid pro quo of full mobility and paying the members the increased wages because of the expectation of increased productive from these hand-picked crews. And I'm certainly interested, with the Court's indulgence, in hearing from counsel if that is the principal issue, because I think the common sense resolution there is simply to recognize that this entire contract is founded on this whole thing working, that it's integral, and that they're back to square one if it doesn't work, either by consensus or as a result of a Court proceeding. THE COURT: So have you looked at this proposed order? Does it reflect what you have just said or your thinking, or does it have to be modified in some way to -MR. WALSH: Well, I think the order is fairly straightforward in recounting the discussions of the parties and the legal backdrop. THE COURT: The whereas clause. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

45 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. WALSH: I don't think that it expressly says that the parties have nothing if this does not work. THE COURT: And does it need to say that? MR. WALSH: I think that's perhaps up to the parties. I believe that is the nub of the discussion that has to be concluded in short order. MR. FORREST: Your Honor, Loren Forrest from Holland & Knight. I representing the Building Contractors Association. Somewhat more of a housekeeping issue I was going to bring up, but it effects actually substantively what we're talking about today. The Building Contractors Association is not being copied on a lot of correspondence to the Court. THE COURT: Everything that we get we put on the docket. MR. FORREST: I understand that, but sometimes, your Honor, it actually comes much, much later. THE COURT: We put it on the day we get it. MR. FORREST: Sometimes, for whatever reason, I'm sure it's not related to your office, the Court, but sometimes we get it later. So I would ask that all the parties and the Court recognize that the Building Contractors Association is actually a party to this litigation, so we should be copied in the first instance so people's correspondence to the Court -for instance, I do not have a copy of the draft order that everyone is talking about today, and I am not copied -SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

46 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: It didn't come -- I didn't see it until about an hour or two ago. MR. FORREST: I know. THE COURT: You shouldn't feel bad. MR. FORREST: I understand, but we get updates -we're not copied on a lot of correspondence. And I think there's been a lot of parties in and out of the case, so I could understand some of that, but I think now that we're getting down to the full mobility provisions being addressed by Court and affirmed and approved, we should all be copied on all correspondence to your Honor, and I would ask that that be done. MR. MURPHY: The draft order doesn't address anything with respect to the Building Contractors Association, so with all due respect, I have no idea what he's talking about. THE COURT: He's just expressing his opinion. If the system is not working, the docketing system, which is the one that I most rely upon for transparency with respect to anything that I receive, then we ought to know about it. But frankly, I thought, and do think -- and it's not worth taking a lot of time right now on that, I don't think. MR. ROSEN: Your Honor, returning to the officer's comments a few minutes ago -THE COURT: Mr. Walsh's? MR. ROSEN: Mr. Walsh's. What happened during the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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47 D2RTUSAC last negotiations for that contract, the employers agree to significant increases in wages in exchange for more favorable rules on mobility and referral, and then the Court struck rules about mobility and referral and the contractors were left paying the higher wages. THE COURT: This happened when? MR. ROSEN: I think 2009. The agreement was in 2005 or 2006. Contractors are frankly scared this is going to happen again, that we have a start-up pilot system that admittedly is not in use anywhere in this country, is being implemented for the first time. If the parties in the front row are unhappy with the way that works -THE COURT: I thought your position was that you thought it was a reasonable way to go, because you suggested a minute or so ago that full mobility and this compliance mechanism you agree to. MR. ROSEN: That's correct. But if in 60 days the review office comes back and says this is not working, we have to revoke full mobility and go back the old way, we don't want to get stuck paying the higher wages. So we proposed if mobility is revoked, the wages revert back, we say, to whatever is in effect now. Now Mr. Walsh is saying we could provide if the agreement becomes a nullity. I wonder about the practicality SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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48 D2RTUSAC of that, because if the Court signs an order on Monday that mobility is revoked, the agreement is a nullity, what do you pay on Tuesday? What are the rules governing staffing on Tuesday? MR. FORREST: Your Honor -THE COURT: Could we have one at a time? I get it. You're not a party to that agreement, right? MR. FORREST: No, but your Honor -THE COURT: So just hold your horses for a minute. So really, Mr. Rosen, is that right? MR. ROSEN: Yes. THE COURT: So frankly that relates to the issue that I raised a couple of minutes ago, where is the agreement? So instead of having this sort of theoretical discussion of what ifs, et cetera, usually what lawyers do in a collective bargaining agreement, they put in the provisions that they think governs the collective bargaining agreement in the agreement. MR. ROSEN: And we have done that. THE COURT: So that's why I raised the question about are we doing this piecemeal, or are you finished yet? If you're not finished yet, when are you going to be finished? A week? Ten days? I mean, you know, I don't -- I honestly don't get your position on this. MR. ROSEN: In terms of what? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

49 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: In terms of what you're complaining about. You started by saying, I think it's quite clear, that you have agreed that in exchange for offering a higher wage that you get this full mobility provision, and you get this compliance mechanism. I haven't heard anybody disagree that that understanding has been reached. MR. ROSEN: That's correct. THE COURT: So I don't get what the problem is. MR. ROSEN: Because of the history of this case and the particular context of this case that was subject to oversight by a review officer and this Court, we have to provide for the contingency we heard last time, which is if somebody comes in and says mobility -- which is contrary to the consent decree -- has to be revoked, we're not stuck paying the higher wages that we are giving now specifically for mobility. And if the district council is willing to abide by Mr. Walsh's proposal, I think my association might go along with it. THE COURT: I am not a negotiator in your agreement. As I said three or four times, I think it would have been cleaner and easier if you had had the agreement and presented it. So it's very hard to give advisory opinions, if that's what you're asking about, in the middle of a negotiation process that you're involved in with Mr. Murphy. MR. ROSEN: And I agree entirely. THE COURT: I suggest that you finish your SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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50 D2RTUSAC negotiation. MR. MURPHY: I think that Mr. Rosen has accurately stated what the issue is, that the association is concerned, as unlikely as it may be, given that everybody is on board with this system, somewhere down the line if the Court, review officer, the U.S. Attorney's Office, says this is not working, it's a disaster, we need to go back to the old referral system of the May 2009 order, that the association would then be arguing that we're not getting the benefit of our bargain. We paid the increases in wages and benefits for the full mobility. If we don't have full mobility, then we're not getting that, so what happens? We get stuck having to pay those higher wages and benefits. That issue was not discussed, as I understand it, because the counsel for either side wasn't involved in the negotiations, which concluded back on August -- or right before August 22nd of last year. There is a separability clause which is typical in collective bargaining agreements that says if something gets knocked out that everything else remains in effect, and I think that's probably what Mr. Rosen, on behalf of his client, is concerned about. So that's where we are as far as inking the collective bargaining agreement. Where we are as far as rolling out the full mobility on March 4th as well as all the compliance procedures, we're there. Everybody is in agreement with that, and we're ready to SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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51 D2RTUSAC go on that. So that's sort of the situation we're in. MR. WALSH: Judge, I think the highest likelihood is that there will be almost complete compliance in the industry with this program. And I think the union and my association and my office will use every effort to isolate the conduct in question, and that it would be a huge step backward. And I aim to salvage, if there a problem, as much of what is constructed as possible. So I think it's highly unlikely that there would be a circumstance so broad that I would ask the Court to completely dismantle what has taken so many years to build up. I think it's important that the association and the union understand that. THE COURT: So you're in favor of going forward now on some preliminary basis? MR. WALSH: I believe the sooner we get the compliance program in place, the better. It will serve its purpose. It will I think lead to the elimination of corruption as we know it, and people will have to come up with new systems once they understand the parameters of this one, to try to cheat. And I think it's going to be very difficult for them to do that with the redundancy and the technology and the oversight. THE COURT: You're of the same view, Mr. Torrance? MR. TORRANCE: Yes. THE COURT: What else? MR. MURPHY: I'm of the same view also. So that's SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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52 D2RTUSAC where we're at. THE COURT: OK. So just so the record is clear, does everybody think that the proposed order that was submitted to me this morning works in the context of what we have discussed here today? MR. FORREST: Your Honor, I haven't seen -THE COURT: You're not a party to that agreement. I'm happy to hear you, but I really don't know that you have an opinion as to whether that order, which is not involving your union, works or not. So I would rather first hear from the parties who are directly affected. I know you have an interest in it, but I don't know that you're directly affected. MR. FORREST: My only question -THE COURT: Just hang on, if you don't mind. So let's run through this again with Mr. Murphy and Mr. Rosen. MR. MURPHY: I believe that the paragraph four, the decretal paragraph four of the order addresses the concerns raised by Mr. Rosen, but he will have to comment on that himself. THE COURT: Mr. Rosen, you feel it works? MR. ROSEN: Paragraph four, as I communicated to Mr. Murphy yesterday, does not address the concern that we discussed. I don't have a problem with the terms of this order, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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53 D2RTUSAC because, as I stated earlier, I believe what this order says is it's approving the mobility and the compliance procedures as set forth in the annexed CBA modifying the prior order of Judge Haight. It's not saying that this proposed CBA is approved and in effect, that we can't agree to, but that's not what this order is saying. THE COURT: How could it if there's no CBA? It's a draft. MR. ROSEN: So I think the reference to the CBA, it's a draft, and looking at the specific provisions of the mobility and compliance -THE COURT: Which you're in favor of. MR. ROSEN: We agree with those. THE COURT: Got it. Anybody else? Did you want to add something? MR. FORREST: Only to the extent that there's a proposed order that would modify previous orders by this Court, specifically Judge Haight's order of 2009, dealing with mobility provisions and modifying the percentage of carpenters coming from out-of-work lists and those issues affecting anti-corruption and full mobility that would affect the Building Contractors Association -THE COURT: How would it? MR. FORREST: Well, if the order -THE COURT: How would this order affect you? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

54 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. FORREST: If this order, as I understand it as I'm hearing, would propose to modify Judge Haight's previous order -THE COURT: How would it affect you? MR. FORREST: I haven't seen it, but those percentages -- some of those orders do affect all the parties. If it's just pertaining to their CBA, you're 100 percent correct. THE COURT: What else could it pertain to at this stage? You heard the conversation. MR. FORREST: Right, I'm hearing it would -THE COURT: It doesn't apply to your collective bargaining agreement. MR. FORREST: I'm hearing it would modify Judge Haight's order. THE COURT: I understand, but does it do anything -is anybody suggesting modifying your own collective bargaining agreement? MR. FORREST: Not at this time. We have a tentative agreement, but I also echo Mr. Rosen's sentiments, until we have a complete agreement, no one wants -- no association wants to have a partial agreement on one issue and then to have it possibly, I know it's unlikely, but possibly taken back, or more importantly, a full mobility or anti-corruption agreement that we agreed to becomes substantially changed and changes the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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55 D2RTUSAC benefit of the bargain that Mr. Murphy referred to earlier. THE COURT: OK. Anybody else? MR. TORRANCE: There may be one small ambiguity that goes to -THE COURT: I don't want to do drafting right now. MR. TORRANCE: But in answer to Mr. Forrest's concern, I want to make clear that in the government's view this does not generally modify the percentages, what it does is it allows the Wall Ceiling Association and the union to implement these procedures only with respect to Wall Ceiling. THE COURT: I think that's pretty obvious. MR. TORRANCE: I think it is, but that's why I point out some small ambiguity in the order. THE COURT: Where is there an ambiguity? MR. TORRANCE: I don't know if this was Mr. Forrest's concern, but in paragraph one it says the Court's May 26, 2009 order is hereby modified by the job referral and hiring and compliance procedures. That could be read to say that since the 2009 order is modified to incorporate those procedures, in general that the percentages have changed. THE COURT: Do you want to -- Mr. Rosen and Mr. Murphy, do you want to look it over and see if it could be tightened and resubmitted in a form that eliminates any ambiguity, if you think there is one? MR. MURPHY: That's fine. That numbered paragraph SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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56 D2RTUSAC does go on to reference the specific CBA. THE COURT: I didn't think there was, but if you do, if you talk to Mr. Torrance and -MR. TORRANCE: If no one else sees it I will back down on it. THE COURT: Why don't we do this, Mr. Rosen and Mr. Murphy and Mr. Torrance, let me know later today whether the draft that has been submitted is OK with you or whether it should be revised in some fashion or another. So I was ready to hear about the funds, unless anybody has any more to say about this. We're going to have status report on the funds. MR. McGUIRE: Your Honor, Raymond McGuire, counsel for the funds. We, at your suggestion, have brought Laura Kalick, who is the interim executive director of the funds, is intimate with the day-to-day operations of the funds, conversant with the status of all the funds, and she's prepared to summarize briefly where the funds stand and entertain any questions you might have. THE COURT: Great, I appreciate that. Thank you. MS. KALICK: Good morning. There are four major funds, the pension fund, the welfare fund, the annual fund and the apprenticeship fund. Each fund has a different objective going forward in providing benefits, and each has its own investment policy adopted by the trustees to further the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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57 D2RTUSAC provision of benefits. The pension fund, for example, is a very long-term investment, it spans the career of the working carpenter. So when benefits will be provided for a particular carpenter is based on a working career. So that investment policy has a very long horizon. The assets in the fund were approximately $2 billion in the pension fund as of June 30, 2012, and the fund for the year ended December 31, 2012, overall had an investment return of just over 11 percent. THE COURT: For the year ended? MS. KALICK: Yes, for the twelve months ending the year end 2012. And the investment policy statement sets out an allocation among different market sectors approximately 30 percent in U.S. equities, 15 percent in international equities, 17 percent in real estate, 21 percent in fixed income, some alternative investments as well as cash make up the balance. There are approximately 11,000 active, at work carpenters accumulating benefits under the plan. THE COURT: Accumulating -- they're not receiving pensions yet, but these are people that would be eligible to at some point? MS. KALICK: Yes, if they met the service requirements and the vesting service. There are 10,000 active retirees who are former active carpenters who are now receiving monthly benefits. There are 4,500 additional benefits payable in the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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58 D2RTUSAC future to people who are no longer earning benefits in the fund but are eligible to receive them in the future. And there are 3,000 beneficiaries of deceased members either currently receiving or eligible in the future to receive. There are three levels of funding status that are determined by the Pension Benefit Guarantee Corporation. The pension fund is in the green zone, which means it's not in endangered and it's not critical. The overall funded status is 84.8 percent as of July 1st, 2011. The green zone means that it is at least 80 percent funded, at least 80 percent of the accumulated liabilities of the plan are represented by the assets. THE COURT: What is are other zones? MS. KALICK: Endangered applies to plans between 65 percent but less than 80 percent funded, and the critical status is less than 65 percent funded. There is an annual funding notice required by law that was distributed to all participants in October of 2012. Any questions about the pension fund? THE COURT: No. Any red flags -- I guess that would be a question with respect to the pension fund -- that I should be aware of that you are? MS. KALICK: No. The fund is well funded, it's very healthy, and it operates very smoothly. THE COURT: OK. MS. KALICK: The welfare fund, of course, has a SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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59 D2RTUSAC separate investment policy statement. It has a much more immediate timing of benefits. It pays significant benefits every year. It's assets, as of June 30, 2011, were approximately $276 million, and it realized investment performance through the 12/31 of just over eight percent. THE COURT: 12/31 of last year? MS. KALICK: Yes, 2012, just over eight percent. It also has an investment among the markets and allocations, it's 11 percent in U.S. equities, 5 percent in international equities, 63 percent in fixed income, 10 percent in alternative investments, and the balance in cash. There are 17,000 actively at work carpenters who participate in the welfare fund, and 7,700 retired carpenters who participate. THE COURT: How many retired? MS. KALICK: 7,700, plus their dependents. So it's a big fund. It's a large operation. The assets -- we consulted with the actuary yesterday. The assets in reserve, if contributions were to stop today, the fund could cover the next approximately 13 months of benefits. There were some changes implemented effective June 1st, 2012 that are intended to decrease the expenses of the fund as well as increase contributions. Deductibles were increased, co-insurance was introduced for some services, and contributions on a monthly basis for retirees were implemented. The Siegel Company projected the savings that were implemented SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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60 D2RTUSAC to be the equivalent of $3 per hour worked, and Siegel monitors the cash flows of the fund both in benefit payments and in contributions periodically, and they see nothing of concern through the cash flows of December 2012. And the board of trustees will receive an update from Siegel in March or April at their March or April meeting. Are there any questions about the welfare fund? THE COURT: Again, any red flags here? MS. KALICK: No, your Honor. THE COURT: OK. MS. KALICK: The annuity fund is a defined contribution plan where the participants direct the investments, how their account balances are invested. There are 16 investment options, six U.S. equity funds, two international equity funds, four fixed income funds, one stable value fund, and three target risk funds. Total assets as of June 30th, 2011, were $1.5 billion. There are 30,000 actively at work carpenters who are participating in the annuity fund, and 5,200 retired or no longer employed carpenters who have account balances. And the apprenticeship fund has approximately $11 million in assets as of December 31, 2012, and it is invested solely in money market instruments. It funds the day-to-day operations of the apprenticeship training fund. THE COURT: Back to the annuity fund, any red flags SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

61 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 D2RTUSAC there? MS. KALICK: No, it's administrated by Prudential, and they do the record keeping and the participant discussion and services, and there is nothing of concern to me. THE COURT: Fine. Thanks very much. MS. KALICK: Thank you. THE COURT: Anybody else? MR. McGUIRE: Your Honor, if you have just a minute, Raymond McGuire for the funds. At the review officer's suggestion of almost a year ago, the trustees explored the possibility of putting in place a compliance program at the benefit funds in order to ensure that there was complete transparency in how the funds were discharging their obligations to ensure that the most cost-effective and efficient methods were being used, and that everything was being done honestly. And again with Mr. Walsh's assistance, the trustees conducted an excessive process, and after interviewing several frankly outstanding candidates, selected Julie Block as the compliance officer. And Ms. Block is here with us today, and if you haven't met her, I would like her to just explain what she has begun to do at the funds as the compliance officer, and I would ask her to describe her experience, which is focused on compliance issues, and pretty impressive. THE COURT: Sure. I would be delighted. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

62 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. BLOCK: Good morning, your Honor. My background is I'm a former prosecutor coming out of the Brooklyn District Attorney's Office where I was centered for ten years. After that I became the executive director of the mayor's commission to combat police corruption, and that is a mayoral agency which stemmed out of the Mollen Commission and is responsible for overseeing and monitoring the Internal Affairs Bureau of New York City Police Department. After that I went over to the Department of Investigation where I was an associate commissioner and served as the inspector general of multiple city agencies, and also had oversight responsibility over a number of city agencies. I left city service in 2009 and went to a private investigative term Granite Intelligence, and I'm also a partner in a law firm, Mueller Block, which stems off of Granite Intelligence. I came to the carpenter's benefit fund on January 4th, and since then I have been in the process of developing a compliance program as well as training material for all of the employees. I anticipate that in the next month to six weeks I will be training all the employees at the fund on compliance and ethics and policies, as well as HIPAA matters and Pension Protect Act. I'm also available to conduct any sort of investigative special needs that come up at the firm in case there's any ethical or corruption or misconduct at the firm. THE COURT: Great. Thank you. You started January SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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63 D2RTUSAC 4th of this year? MS. BLOCK: January 4th of this year. THE COURT: Thanks very much. Nice to have you. Anybody else? So we usually reserve a couple of minutes if any of the union member rank and file want to make some comments, you can do that for about ten or fifteen minutes. MR. MURPHY: Your Honor, if I may, at the last conference you asked that the director of communications for the district counsel attend this session and be able to give you a presentation about web site. THE COURT: That's right, I'm so sorry. MR. MURPHY: He's hooked up and ready to go on that. THE COURT: All right. Let's do that first. MR. MURPHY: Kwame Patterson. MR. PATTERSON: Good morning, your Honor, Kwame Patterson, director of communications for the New York City District Council of Carpenters. The web site is now in its six month -- or is now six months old as of this month. It was launched in August, and it currently has several thousand visitors, averaging more than 1,500 unique views a day. In addition to that, we log in 50 to 100 members and apprentices a week as well. The site was basically updated for two major reasons, one, to update and improve upon the district council's online SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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64 D2RTUSAC appearance, and second, to create a more user-friendly site for the members of the general public. So far what we have seen from a user perspective, it's easier to navigate, better organized, new search engine features, as well as users can update their own information, including emails or just the personal data. From a management perspective, we have instituted a way that's easier to add and manage the content that goes on the web site, as well as easier to add features like blogs, comments, what have you, easier to secure content behind a password or secure location, as well as easier to manage the users that log into the site, and once again, the better search engine. The last web site did not have a search engine, so information was kind of just thrown into different categories and the user or the visitor -THE COURT: Had to know those categories. MR. PATTERSON: -- had to know those categories or specifically what they were looking for. Now you can type up what you need within the search engine. And what is unique about the web site -- and the old web site also possessed this type of component, but what is unique about the district council's web site it has two components, one that has a member access one and one that has a public access. If I could take a few minutes to run through what the public sees and what the member sees. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

65 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Yeah, you can. MR. PATTERSON: It's kind of small, I had to kind of capture images on my desktop in order to bring this -- in order to make it visible to you, but I will go through the twelve different individual spaces within. THE COURT: All right. MR. PATTERSON: This is what the public sees when they initially go on the web site. There's a visualization of the photos of rallies, the type of work we're doing on certain construction sites. That's in the photo section. Then there's a tool bar above that with six different categories that the general public can visit, and there's of a search engine to your top left corner underneath the rotating media box or the photo box, there's the top stories of the day or top stories of the moment with the district council. Below that is the upcoming events, such as delegate meetings, such as local union meetings, such as today's court hearing. And below that, because the site is vertical, I wasn't able to get it all on one page, is the careers within the district council. That opens to the public. You have magazine that is available to the public digitally. You have a feedback section as well as a new media section that includes Youtube and Facebook. Then member quick links. So members don't have to search through the entire web site to find the information, they can immediately go to the member quick links and look for SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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66 D2RTUSAC their benefits, which takes them to another whole web site that we don't control. We don't control that web site, it's the benefits web site, but it takes them directly to it. The out-of-work lists job listings, which is updated daily, or just general contact lists. Above that you have the "In The News" section, which includes news that is pertinent to the district council or just the labor movement. And above that is actually a member protected area called "Member News," and that news is specific just for members, such as death notices, such as audio recordings such as message from the EST or executive secretary treasurer. Also on the public page you have drop down menus on the top of the tool bar. When it says "Who We Are," you get a section that provides the leadership, the locals and trades that are associated with district council, the UBC, the history of the district council, as well as the various departments within the union. Also you have open to the public is the labor technical college, our training facility. Because all apprentices aren't really logged in just yet or don't have the UBC number, we keep this particular section open. In addition to that, you have the feedback section, which is also open to the public. And what it asks for is for members or general public, if you have comments, questions, or just general concern, please send us that information and it SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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67 D2RTUSAC can be published on the web site and in the carpenter magazine that is produced quarterly. In addition, on the public web site the IG's office is also open where you can report certain work hours or misconduct that you may see on job sites that is also -- all that information is also provided within the drop down window. And then you have the press room where the media can actually go to for any questions or queries they may have. They can contact me or my assistant, Jen O'Donnell, as well as the press releases and kind of media hits that the district council has received. Then you have the members log-in section. This is the protected area of the web site where only members or those with UBC numbers and access codes with log into. First off, the member would have to just provide their UBC number and type in the last four digits of their Social. What we're finding is because this is a new site, all of the numbers do not carry over from the old site, all the UBC numbers. Therefore, members can call, email, or just contact us in general for us to manually log them in. So we provide that service in the bottom that says email us or contract us, in case you can't log in. Once you get into the protected area, two new drop downs are presented, which is the library and the members' section. The library basically provides kind of historical SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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68 D2RTUSAC data, it provides Court information, information that is fairly sensitive to the district council as well as its membership, and its all in that kind of general location. One part of that kind of sensitive information is the consent decree, which all members can view, or those who have code can view, as well as the review officer's interim reports and exhibits associated with those interim reports. Then you have the member section. Within the member section there are 18 different drop downs. It's just chock full of information where members can basically view their out-of-work lists, which -- out-of-work lists, which is updated daily form our Ultra system. They can also view their individual skill sets. They can view contact for all district council employees, whether it be email or whether it be fax number or phone number. I show you an example of that. This is the out-of-work list that only the members have access to. This is the contact information or part of the contact information for all staff employees. And what they can also view that is not open to the general public is kind of where we're having demonstrations or just public protests, what have you. This is updated as well on a daily basis, and this just tells members where they can report in order to take part in this particular demonstrations. In addition to that, also this actually open to the public and general membership, is the anti-corruption page. If you have SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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69 D2RTUSAC any particular issues or problems, of course you would like to report in to the review officer all of the contact information and how go about providing that information is detailed. And once again, the web site is now six months old. It's a living, breathing type of entity. We're continuously working on it. We're continuing trying to update and it make it more user friendly towards its members, and constantly asking for feedback from staff as well as the membership. And it's coming along. I find it to be successful in its use right now, and the numbers are proving that with 1,500 unique views a day. THE COURT: Thanks very much. So we have time for maybe five or ten minutes of comments from the audience, rank and file. MR. WELLINGTON: Good morning, Callixte Wellington, union member for the last 27 years, on behalf of the -THE COURT: Speak up a little bit. MR. WELLINGTON: -- on behalf of the district council in New York. And my main reason I would like before I start to submit my statement as an Exhibit A to the Court, which is written. THE COURT: Sure. MR. WELLINGTON: I ask for time for the other members of the rank and file to -THE COURT: Just ask for yourself, let's hear the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

70 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 D2RTUSAC comments. MR. WELLINGTON: Before I go to my statement I would like to make response to -- I would like to give response to -THE COURT: We only have about five or ten minutes all together, we're running late, so I would like you to get right to it. MR. WELLINGTON: That's very good of you, your Honor, but every aspect -- every decision made here today is affecting we the members. THE COURT: I understand that very well. MR. WELLINGTON: First of all, the comment I would like to make -- I think Mr. Murphy stated that stewards are recording the documentation of employees working on the contractors in return on these records, and for one reason that he's not sure where the inconsistencies lies in between the two. It's clearly that the stewards are always a hundred percent right. The only way we record the worker is when we see them with the tools working. They would rather give us their card and they go back to work. How could they not be sure? So this gentleman that stand up and corrected Mr. Murphy, I have to support him. He said that the problem lies in between the contractor and the district council on the monetary, on-the-table basis. So that said, we know the problem is not the steward, so Mr. Murphy should get that SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 D2RTUSAC right. Second, I would like to -THE COURT: My recollection, I don't recall Mr. Murphy saying that the stewards make mistakes particularly. I mean I didn't get that impression. If you did, I want you to know that I did not. MR. WELLINGTON: I understand. The problem lies if a steward record documentation on the report to the district council, it is absolutely imperative that the district council represent the steward, because they are known to be the eyes and ears of the district counsel. Why are we risking ourself giving you what is right and then in return you're passing behind and misrepresenting these very stewards? It happened before, it is happening now. Anyway, let me, since I have such a short time, my statement says true memories of the past. I can remember over a decade only ago this labor organization suffered extreme pain when they had to go through the needless corruptions, the lack of integrity, misappropriation of funds and extravagances. After that, the district counsel was able to purge the sores from its skin with the help of true membership patriotism and the law, which is the Court. My second issue is misguided leadership. Its parent partner, the UBC, was the next phase of dictatorship for which stood like a thorn on our backs, where there wasn't no rank and SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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72 D2RTUSAC file members' voice in electing or appointment of delegates, secretaries and presidents of their own offices of the district council. We changed that with the help of the courts and the voice of people. Now we, the union members, have a right to nominate candidates and run for office or protest the conduct of an election. These are good things. What our problem is that now we are facing a new battle, which is an internal power struggle. The very same people who we elect have violated our legal rights under LMRDA. In other words, the employees of the district council to the larger extent, and a couple of rank and file members who are currently serving in position as delegates and executive position, what I mean the members who serve under the delegates who in return ratify the contract are not representing us, the rank and file, because I will tell you why. These contracts were sent to us in a mail-in ballot, full mobility to vote on. We voted it down. How can the very same delegates we employ or we appointed are ratifying the contracts in our absence and accepting it? The review officer has a lot of credibility, but for now I only say is half of what he has done is correct because of the implementation that of things that have taken place in the district council have not been forthwith the members. Lastly, we suffering through a plague of inconsistencies. Majority of the leaders are representing us SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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73 D2RTUSAC for too long. Your Honor, the last time I checked the definition of "represent," it states that one who represents is an artistic likeness or image. Our current representation have forced us to accept a contract with fear, let alone members getting any good on what they voted for in the first place. That's the reason we're here. So I beg you to do the right thing for the members. I thank you. THE COURT: Thank you. MR. WALSH: Good morning, your Honor, Bill Walsh. I'm a financial secretary for Local 157. I'm a delegate and I sit on the audit committee, and I'm a 27-year member. I'm going to keep this very brief. I know you want to hear the other brothers. Basically I'm going to just mention that all of the members that speak to me on my behalf as a delegate, every single one of them are against the against full mobility. I am totally against it. I think it turns our union into a contractor-friendly business and takes away what the union stands for. I have always wanted it 90 from the out-of-work, 10 percent from the company like other unions do, the electricians and many other unions do follow that. I believe that is going to open the flood gates for corruption and unfairness. And basically the real corruption in the past was with the big companies and the past leadership. Today the problem SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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74 D2RTUSAC that we would have would be with the stewards putting people on the sheet when they're not supposed to on the steward reports or not putting them on there. If we would put stiff penalties in place, like expulsion from the union and legal things to the U.S. Attorney, I don't think you're going to see the corruption that we saw in the past. This whole technical panacea we have been presented with here will cost well over a million dollars from I can get from the numbers, it will be well over that. It's all an exploratory process, it's a trial basis. And it's going to to cost a lot of money. The members have no dental, the glasses, the members are paying huge co-payments. This money could be better well spent on the membership, and I would like to see something like that done, and please vote no on full mobility. Thank you, your Honor. MR. SCHROEDER: Good morning, your Honor, Demian Schroeder, member of Local 45, Queens, rig worker by occupation and shop steward. I was affected by the MWA matter, and in my experience as a shop steward encountered problems with compliance. The MWA had full mobility for the first several years, and one of the problems is that members are reluctant to speak with council representatives and stewards about non-compliance issues because they're concerned about their livelihoods. THE COURT: About not being hired, you mean? MR. SCHROEDER: Right, they would be let go. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

75 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 So I too am here to register my disapproval with the full mobility. And I also would like to comment on the constancy of the record in that with the challenge from 50/50 to 66/33 there's this issue of contempt, and the remedy was to give the associations a better deal, in their opinion, to the ratios. And then more recently with Ford administration and the director of Wall and Ceiling being incarcerated for perjury having to do with his connections with organized crime, we are again here with the associations asking for a better deal for themselves. The main point that I would like to make is that, as everyone here in court is having difficulty coming to some agreements, what really has been left out is the members having a voice here. In March there was a member ratification of the WC and C contract, and it was rejected. Then in August, at very short notice, the delegate body ratified these agreements. And the argument was that we need to get this done. Now here we are several months later and they still haven't been done. So it begs the question why were these agreements pushed through so quickly without the adequate vetting by the memberships and an actual ratification. THE COURT: You don't think there was a ratification? MR. SCHROEDER: Excuse me? THE COURT: You don't think there was ratification? MR. SCHROEDER: Well, not according to the precedent SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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76 D2RTUSAC that was set. The bylaws states that the delegate body has the authority to set the rules for ratification, and when they did vote to grant the members rank and file ratification, that, according to carpenters interpretations, was the setting of those rules. So the subsequent ratification by the delegate body would be a violation of the bylaws and the consent decree. So I have a letter which I would like to submit to your Honor. THE COURT: Sure, we'll take it. MR. SCHROEDER: If I could read two sentences. THE COURT: You have a big line behind you. MR. SCHROEDER: Just two sentences. This letter is in response to the Wall and Ceiling Contractor Association and district council's attempt to circumvent the tenets and specific requirements of the consent decree for violations of prong one, the elimination of racketeering; and prong two, the restoration of democracy by engaging in a continual and prolonged pattern and campaign to negate the requirements therein as well as negating specific provisions of the New York City District Council bylaws dated August 5th, 2011, cited herein, and federal labor law as regarding long-settled law and precedent decisions of the NLRB, appellate courts, and United States Supreme Court. THE COURT: OK. I'm happy to take the statement and make it part of the record. We're running out of time. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

77 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. SCHROEDER: We're asking for a TRO and injunction, permanent injunction. I have two copies for the U.S. Attorney and the review officer. And we'll be filing this pro se letter today with supplemental petition. Thank you, your Honor. MR. FRANCO: Good morning, your Honor, Dan Franco. THE COURT: After you we'll take a break and I have to deal with another case briefly then we'll come back for a couple of more speakers. MR. FRANCO: Thank you very much, your Honor, Dan Franco, Local 157. Two main things I want to talk about is the contracts and the charges that I brought against EST Bilello. The first thing is Wall and Ceiling contract. Most of us here that have come here today are stewards, but as far as I understand it, every carpenter that came here today is against full mobility. In 2007 we know about the contempt remedy that was remanded back to the Court. Judge Haight came back with the remedy of 67/33. That remedy actually rewarded the contractors for their violating of our rules. It was 50/50. Thomason gave away the 50/50 and the six-month rule. Then we have in March 2012, we had the vote by the membership, and we voted down all but the one contract. Wall and Ceiling contract, it is my understanding, was voted down primarily because of full mobility. We don't want full mobility because of the harm it caused. I submitted the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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78 D2RTUSAC petition to this Court in March of 2007 against it. In addition to that, we have the MOU vote in August 2012. And when the delegates voted to approve that, in my opinion, my perspective and other members' perspective, they violated their obligation their UBC obligation to abide by the rule of membership. And I personally get from several delegates they don't have to follow what we tell them to do, they can vote any way they want at the time the vote is presented to them. We made motions in our local to find them to vote no on that contract, and they ignored them. I didn't bring charges against them because I figured at this time they're not going to go through, particularly with the new trial committee the way it's set up. The new trial committee is set up like the old trial committee, it was kangaroo court. But in addition to that, Mr. Murphy proposes there's going to be multiple instances of violation of the full mobility addendum. As far as I understood, there was only going to be one. But as far as I read, there is no particular number of violations that can occur before they lose the full mobility provision, to my knowledge. In addition to that, Mr. Rosen supposes that if they violate the contract, or Mr. Walsh decides that the full mobility provision is not acceptable and it gets removed from the Wall and Ceiling contract or gets removed as an addendum, that we're going to revert to lower wages or benefits, that's SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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79 D2RTUSAC completely unacceptable. If they violate their contract, their stuck with those wages. But they do have ways around that with PLAs and other project labor agreements. But in addition to that, I was working for a company last year, and one of their representatives, their bosses, told me that when they do their estimating, since they have 67/33, two guys from their company and one from the list, they figure that the guy from their company can do 40 boards a day and the guy from the list about 33. So 40 plus 40 plus 33 versus what they want, 40 plus 40 plus 40, that's only 6.1 percent productivity gain. The proposed wages far exceed that. Full mobility was never about productivity, it was always about full control of job site by the contractor. That's what full mobility is, it's about control. In addition to that, there's my charges. I brought charges against Bilello and Lebow and numerous other representatives at my union. I submitted those charges on February 11. I was told that there was a form I was supposed to submit. I submitted it by nine-page letter. I was told there was a form to fill out. I finally filled out the form out and I resubmitted those charges. I only resubmitted once against Bilello and Lebow. And under the old trial committee under Walter Mack and Mr. Zazzali, me and Bob Masowski got two trial dates, and then that trial committee was removed and the new trial committee was put in place, and Mr. Walsh vetoed the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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80 D2RTUSAC new process which negated me bringing my charges against them. Basically he squashed my charges by vetoing his process. THE COURT: I'm familiar with that. I have your letter and their response. MR. FRANCO: And I apologize for not providing more information because I have been a little busy, not an excuse. But I find it odd that the new trial committee put in place, and Mr. Walsh waiting until then to squash my charges when he knew about them previously, and feel offended. And this is exactly why people didn't submit charges against their representatives because they knew that they wouldn't be able to go through. With the new trial structure it goes to the executive committee. I figured the executive committee would get rid of the of charges, but I think my charges should go forward. It's not a waste of time, particularly because our new representatives are not doing their job. In my opinion, my perspective, it's actually worse under the new administration than it ever was. And I ran against Ford, and all the other guys should not have been in office I think most of them should have been in jail. That's my personal opinion. These new guys, they are failing, and it's failing under this watch. And I think my charges should go forward and we should see what comes of up. THE COURT: So here's what we're going to do. I have to do one or two other matters. We're going to take a pause in SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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81 D2RTUSAC this district council matter, probably going to be for an hour or so. And if anybody wants to remain and be heard after that, that's what we'll do. But what we do need to do, I think, maybe in this interim, is if you, Mr. Walsh and Mr. Murphy and Mr. Rosen, in particular, could take a look at that order again and see if that is, in form and substance, satisfactory. And if it in fact adequately takes into account the fact that there are some remaining aspects of this agreement that have not been negotiated, and just a question, and let me know on the resumption of what you think about that. Thanks. (Recess taken) THE COURT: So before we continue, just let me give you a few suggestions. One is that I received a somewhat revised proposed order, and I will make that a court exhibit to this conference that will be on the docket. Number two, before I continue with hearing from the rank and file, which I will do, I will hear from them to one o'clock. I have a brief meeting at one o'clock. It shouldn't take more than 10 or 15 minutes. And then I will come back and finish up anything that hasn't been finished before that time. And third is that I would like the parties, while either during that 15-minute break or if they know now, to be SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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82 D2RTUSAC thinking about when the successor CBA in fact will be fully negotiated and executed, because I would like to include in any order not an exact date but that you will use best efforts to have completed by a certain date, and perhaps could you discuss that during the break and let me know that. So we were -- yes, sir. MR. MASOWSKI: Good afternoon, my name is Robert Masowski, Local 157, speaking on behalf of membership and myself. First thing I have to say is I have a direct question that is short, and I hope you don't mind if I can get an answer. Is full mobility an issue that coincides with a successful labor management component, or is it a issue that goes before the members? THE COURT: I'm not sure that I understand the question. The way I understand it, though, is it's in the collecting bargaining agreement, and the collective bargaining agreement has to be approved by the rank and file. So is that -MR. MASOWSKI: Is mobility inside that? THE COURT: It's part of the agreement. Does anybody think differently? MR. MASOWSKI: I think that's what we got. THE COURT: Mr. Murphy? MR. MURPHY: Yes, your Honor, what the bylaws provide SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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83 D2RTUSAC is the delegates determine how collective bargaining deals will be ratified. And in the past they have done it different ways. One way they did it back in early 2012 was to submit six collective bargaining agreements that essentially had been negotiated during the UBC trusteeship and sent them out to the rank and file through the American Arbitration Association. THE COURT: Now we're talking about format, but as I understand it, it is a provision of the collective bargain agreement, and that agreement ultimately gets ratified or not by the rank and file in whatever form. MR. MURPHY: What the bylaws say is that collective bargaining agreements, how they're ratified is how they're determined by the delegate body, which can ratify or eject proposed collective bargaining agreements. THE COURT: I think we're saying the same thing, but maybe not. Anybody else have authority about that? MR. WALSH: Just in terms of the bylaws, the plenary authority resides in the delegate body to make that decision, and perhaps they set a precedent or expectation when they sent out the other contracts to the rank and file, but I do think they have the authority to make the decision on a case-by-case basis. MR. MASOWSKI: What I meant to follow up with on that is be it through their own voice or that of the delegates. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

84 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: I don't know, we might be splitting hairs a little bit. It seems to me to the delegates are the representatives of the rank and file. MR. MASOWSKI: Your Honor, they were bound to vote no on mobility. So if they go back to the district council and say we approve it, they are simply not representing the will of the membership. There's no other equation that can come out of that. THE COURT: All right. MR. MASOWSKI: Mr. Murphy indicated earlier that the executive committee approved the expenditure of $1.7 million of administrative costs incurred between the district council and the funds for the MWA situation. That did no go through the delegate body. That should have gone -- during this period of self-government, it should have gone through the delegate body, that expense. MR. MURPHY: Your Honor, may I be heard? THE COURT: Wait, and maybe there will be other issues. MR. MASOWSKI: Mr. Patterson points out that -THE COURT: Make a note. MR. MASOWSKI: Mr. Patterson pointed out that for the first six months of this previous year, the web site wasn't functioning the way it was supposed to be. That was the crucial six months leading up to the Wall and Ceiling SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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85 D2RTUSAC agreement. And I believe under self-governance we had the ability to use that web site for dissenting opinion and follow-up in minutia that is supposed to be included there, according to the review officer. So being that the web site and the 12G requirement of the bylaws had not been met within that first six months, I wonder how you can rely on that web site as a tool in that determination. That's the second issue. I don't want to belabor the point, but when the gentleman lawyers were up here earlier discussing the tie-in between the BCA and the Wall and Ceiling, I saw there was confusion as to how a full agreement wasn't available for anybody. But it seems that in August, both in August and with the recent BCA submission to the members and the delegates, that it's being done in the same similar fashion, only four-page addendums are being handed, not the full agreement. Now back in August, a four-page addendum was handed to the delegates 5:00 p.m. the day before they were to vote on that contract. Simply not a sufficient amount of time to give the back and forth between the members and the information. 3/12 members turned down the contracts. THE COURT: I'm sorry? MR. MASOWSKI: March of 2012 when the members voted down these contracts, that to me should be the only microscope that you use in determining the will of the membership. Even SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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86 D2RTUSAC if they are low numbers, those are the guys that turned out, participated, were active and aware, met with people, attended these delegate meetings, and witnessed this legislative body over the past year. So if the members turned it down -- I precluded this in my comments last December, 2011, that the delegates simply won't take that message back to the council. They're going to vote of their own volition. And like I said, we bound them with a majority motion in the local to do so. So obviously that tool, that microscope, should be the only way that you view this through, not the ambiguity of well, this mobility thing is tied to the labor management thing. It's in front of the membership, they voted it down. Plain and simple. I would like to just for a brief 20 to 30 seconds the Walker plan that precluded the removal of Walter Mack and Mr. Zazzali was grossly inaccurate when specifically looking to the delegates were told the cost of what the trial committee was going to say. Mr. Mack had -- I know you know about this because I read it from the transcripts last month, which we didn't get on web site, so we could be here, that that's why the room was empty, nobody knew. THE COURT: Nobody knew what? MR. MASOWSKI: The January or the December -- the most recent court conference in this matter. THE COURT: The one before today? MR. MASOWSKI: Yeah, with Walter Mack and Zazzali SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

87 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 D2RTUSAC present. THE COURT: You didn't know about that? MR. MASOWSKI: We were not told about that. And that is something that should have been put up on the web site. In that sense, it isn't working. But when you talk about the costs that were put out to the delegate body, the exorbitant high cost, Mr. Mack and Zazzali had agreed to significantly reduce their salary, not the operational cost, to $6,000 a month. Now that in itself was not told to the delegates. They had no idea this was happening. So selective information was being passed to the delegates in delegate meetings. That's what I must say. Now about those delegates in those delegate meetings, if the members voted down those contracts in March of 2012 and they subsequently vote them in, they are representing a phantom membership, not the guys that came out to vote, not the guys that are active, aware and participating, the guys that spend three or four hours a day sitting on their butts in the hard chairs, the guys in the member gallery. We were given that tool to watch the legislative intent of our delegate body. And as you read, up until recently it's been non-existent there. The meetings were a ruckus, they just didn't get the business done, they were heavy-handed, and that's how they took back that ratification of the contract. So when BCA comes up and they have a two- or SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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88 D2RTUSAC three-page addendum that ties itself to the Wall and Ceiling, that's why the BCA thinks everything is approved because Wall and Ceiling went through. So there seems to be some confusion to how this piecemeal fashion of delivering this information to the membership of the delegates is taking place. It's small bits, and we're not getting much. Transparency and disclosure have been nil from the districts council. Mr. Walsh commented on that in like fashion. And we just have had a restrictive time in trying to get other delegates to do anything. I'm going to use the term Ford hold ups, and I know people to my right don't like to hear that term, but you have people in the district council that were part the Ford regime. Now I understand the anti-corruption issue arises and business of government has to be conducted, but those are the people that screwed us the first time, and basically, they're doing it again. And though they might disagree with us, there's a large portion of 20,000 men out there that disagree with their analysis of the situation. It's simply up in front of our faces every day that these guys don't deliver what it is we want them to tell the council. So I can't go on further about that. There was mention in 2011 transcript, November, December, and I don't know if there was an omission on this side of the room's part, delegates do not negotiate the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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89 D2RTUSAC contracts. In the transcript it specifically states delegates were negotiating the contracts. Now you would think a hundred guys are sitting in the room so they can disperse this information to the membership. That isn't the case. Executive delegates comprise a negotiating committee. That's a reduced number of men who sit down and negotiate the contract. I will shut my mouth after one more example. Our executive delegate in our local is supposed to report back to us the progress of the negotiating stages. I thrust the question to our executive delegate: Has Mr. Bilello informed us adequately enough so that we can vote on these contracts or have our delegates vote on the contracts? His answer was no, plain out and simple. And he's there all the time he's part of the inner workings. And then at the next available opportunity, Mr. Bilello was seated in the Local 157 meeting as a member, and I asked the executive delegate the same question, and he invited Mr. Bilello up to try to clarify the situation, and he didn't comment, he just remained silent. But if we have an executive delegate in the largest local in New York City, never mind the country, bypassed, his concerns bypassed on this issue, it's clear that we have not received adequate dispersal of information and time to tell and instruct, or have we received adequate due rights in instructing our delegates how to vote instead of voting on their own volition. Thank you very much. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

90 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Thank you. MR. CORRIGAN: Good afternoon, Judge Berman, my name is Peter Corrigan. My family has been the carpenter's union for over a hundred years. And my basic question to you is do you believe that full mobility itself is a violation of consent decree being the fact that it takes away the democratic progress and the randomness of the out-of-work list? I mean any of you cold put your name on the out-of-work list tomorrow if you get laid off from a company and you have an opportunity to get a job because you have that out-of-work list to fall back on. You're not beholden to the company. Because so much of this new system -and there's a lot of good things about the new monitoring system they want to put in. Do I think it's going to work overnight? No. Do I think it needs to be rushed true like it's kind of being rushed through now? No. I think it needs more time to get it right. But the biggest problem I see with full mobility is everyone is going to be beholden to the company. So you want guys to be able to stand up and say hey, this guy is playing games over here with this many hours, that many hours, whatever. But what tends to happen in this industry is supers from Wall and Ceiling Association, they all know each other and go to Florida together, they're always near each other, they're companions almost. That's not right word but -- so if you SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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91 D2RTUSAC stand up against a certain company because they're playing games, there's a strong potential you could get black balled from the whole Wall and Ceiling Association altogether. So where are you supposed to go after of you speak your mind or stand up for yourself? You could be black balled in an industry and sit on the out-of-work list that may never move. You literally might die. My other question is something that I don't think any of the lawyers from for the Wall and Ceiling Association mentioned today, and that is the market recovery part of the contract and the economic stimulus, give backs on certain amounts of square footage job sites, like say under 100,000 square feet, I think they want an 80 percent rate. And I think that all ties together with full mobility, because there's a lot of delegates and rank and file guys are not going to vote for full mobility if you have to tell them they have to keep market recovery in the contract. So you're going to tell me that I'm going to basically give you a hundred percent employment and then I'm going to have 80 percent rating. It's never going to jive. And that's something that I think is missing from the Wall and Ceiling presentation today. There's no mention of that. And those jobs are starting to spread like wildfire. The second thing I wanted to ask you about is: Is there any information on exactly how many tablet units have SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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92 D2RTUSAC been distributed on job sites? Because I believe at the close of business today there should be as many as 300, as per the compliance letter that was sent to you. I don't think any of those deadlines have been met yet. So is there any way to find out how many tables have been distributed? THE COURT: Somebody here may know. We'll get to that. MR. CORRIGAN: The other thing is: Why is all the onus on these tablets on the membership? The labor management fund was originally started to benefit the contractor and the rank and file member with the 28-cents an hour contribution. So that way you could get -- for instance, we used to have a banner in Citi Field that said build union, use the union carpenters, union contractors. Now we'll take 28 cents an hour from the membership to fund something that polices the contractor. I think that if the contractors want full mobility bad enough, they should pay for it. Why are we paying for something to safeguard them? We're just trying to make a living. And that's pretty much it. Thank you for your time. THE COURT: OK. We'll have to take another break. I'll be back in within 15 minutes or so. (Recess taken) THE COURT: Do we have anybody else? Any other members that wanted to be heard? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

93 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. TORRANCE: Your Honor, may I just say I was actually supposed to attend a hearing right now at the Court of Appeals. I don't know if my presence is necessary. THE COURT: I don't think it is. I don't think it is. So after we hear from the others who want to be heard, I WILL take the matter under advisement. I'm not going to do a ruling today in any event. So I think I know your position. The not concern, necessarily, but the issue that I have i want to ask a little bit more about is the fact that we don't have this completed agreement, and so I want to talk to the lawyers a bill bit more about that. MR. TORRANCE: But I believe that's between the parties of the contract, so if I may be excused. THE COURT: Certainly. MR. TORRANCE: Thank you, your Honor. MR. NOONAN: Hello, your Honor, James Noonan, Local 157, carpenter for 26 years. THE COURT: Could spell your last name? MR. NOONAN: N-O-O-N-A-N. Why I'm here, why I took the day off, lost a day's pay, I am absolutely against full mobility. And I think that you would look at me and you would remember that I was so much against it. It's a major factor in our local, and look at how many people showed up. That's because we have taken our small SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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94 D2RTUSAC family unit as a local and made it a conglomerate, and nobody cares. We voted against the contract as members, and then it just got washed down the toilet and they agreed to it, and this is what we're going to get. So this is the apathy is nobody cares, it doesn't matter. And you're our last hope, our last hurrah that 50/50 was to save our union, our local, our union, with a company -I have been a steward for a long time, and I followed the rules. Companies particularly don't care for me. If I wasn't a steward, I really wouldn't be working too much because they would see me, know that we're going to take lunch, there's not going to be five extra guys on the job just for three days, just the normal rules that they violate on a daily basis. Now this is what is going to happen with full mobility, you're going to allow a company we'll say 20, 20 of his men on a job. Now all these 20 men are competing among themselves to keep their job, and there's going to be one steward. The foreman is going to go to the steward, listen, we're just going to stay like 20 minutes, get this done. What about paying us? Don't worry about it. OK. Now I'm the steward, I got 20 guys that are going to agree with this that are all going to say they didn't work 20 minutes. I'm one guy. And that's got to happen in every scale of the situation that appear on jobs is the company men are going to go with the company because that's their job that SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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95 D2RTUSAC feeds their kids. And if you OK that full mobility, it will be the end of our union. We will have a union because companies will employ union men to do their union jobs, but as far as the principles and ideals of a union, which are not only about getting a job done, they're about taking care of each other. You know, this out-of-work list is a computer, it doesn't know that Johnny Smart needs a hundred hours so that he has benefits so that his wife can have the medication that keeps her alive. But I need these hundred hours, but you know what, I'm sorry, the computer says you ain't going to work. And you can't go to your business agent and say listen, I need it. You know what? That's a crime to go to your business agent and ask him for a job because I need a hundred hours or else my wife isn't going to have, and I'm going to go broke. Every -- all those -- that's just one example, there's a million of them where there's no person that I can go plead my case to, because now it's a crime. I used to say, you know, this job it will be -- I'll let you have your ten guys, get it done, next job is mine, you're going to have ten guys of mine. That used to be called a wash, now it's called two crimes. So my name is James Noonan. I have been a carpenter for 26 years. Our union used to be about our members, now it's not. They have taken it away from us. And you are -- your ruling is going to say yea or nay. As far as watching you, I SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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96 D2RTUSAC think you're going to do the right thing. I hope you do. Thank you. MR. CLARK: Good afternoon, my name Gene Clark, and the first thing I would like to express is a congratulation to Lisa Zornberg for the job well done that she did, and now she went into private practice for another law firm, and I think she should be congratulated for which good she did for the families of the carpenters of New York City, which I would like to see continue on. Unfortunately, this full mobility scares me. What it is is ownership, just like Dan Franco said. They want to own us, they want to own this union, and you'll never hear from us again. We'll be like people on the plantation, and we'll be learning all those old favorite songs as we do, and that's exactly the way I look at it. And it's just ownership is the whole game. They want this union. Look, we got PLA already. We're the only union that pays $7.51 less at this present time. The other unions didn't budge, but we did. We gave in already. This is the start of the tumble, and this is the start of our downgrade as a union, and this is what I feel has to be stopped. And the only place we can do it is here in your Court. And I hope that you can hear us and listen to us and please help us. Thank you. THE COURT: You're welcome. MR. MATTHEWS: Hi, my name is Francis Matthews, I'm a SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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97 D2RTUSAC dock builder of Local 1556. My first question is: Will there be an opportunity prior to your ruling on matters before the Court today for members to have any further chance of comment on these issues, including mobility? THE COURT: Yeah, there will be. MR. MATTHEWS: Thank you very much. I had another issue that I wanted to bring up. I wanted to bring up the issue of the appointed shop steward for 1556. Your Honor, my name is Francis Matthews, dock builder of Local 1556. I am bringing the issue of the appointment of shop steward to you. Mr. Murphy has stressed how important the certified shop steward off the list is in fighting corruption and how the contractor can choose everyone else on the job except for the shop steward. Half of our local does not follow the consent decree and get a shop steward off the list. The other half of our local does get a shop steward off the list. I was told all appointments were checked out and there were guidelines set in place to be followed and that the program would be reviewed. We have reported at least one instance of a shop steward for the company Irving Foundation going from job to job with them, yet as of Monday, he was still a shop steward on 39th Street and 6th Avenue in Manhattan. The bylaws of the district council state that the shop steward needs to have five years experience. I believe that an SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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98 D2RTUSAC appointed shop steward should also have five years of experience. Yet we just had an appointed shop steward with less than three years experience killed on the job while working for Hydro Marine. His name was Michael McQuay. He was 34 years old. He left behind a wife and two young children. I ask your Honor: Who checked out his appointment? Who failed this member? How could a journeyman without proper experience fall through the cracks? The shop steward is not only responsible for keeping the time and seeing that the contract to follow the CBA, he also responsible for seeing that proper safety precautions are observed. You had need experience for this. This is why we have the five-year requirement. Your Honor, I do not want to see another person appointed without having the proper experience. The whole appointment system is a failure. I ask that you make the dock builder portion of Local 1556 follow the consent decree just like every other local in New York City. Thank you, your Honor. THE COURT: You bet. MR. PASSARO: Good afternoon. My name is Joseph Passaro, I'm from Local 1556. There are several things I want to talk about, but will do a little of what I think is the most important. You are aware that the dock builders have or had a separate fund that has nothing to do with the district counsel? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

99 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: I'm not sure that I am. MR. PASSARO: It's actually a trust fund. Here are the documents. That's been around since 2003. The trust fund under ERISA guidelines. That's the trust documents, the modifications, and the plan description. The primary reason for the consent decree is to eradicate racketeering, correct? On August 25th, 2011 a CPA was hired, Terrence Moony, to overlook the issues of the old 1456. One of the issues that came up was in fund. Back then, 25th of August, 2011, he made a statement that there was $1,298,000 uncollected in that fund. In the third interim report -THE COURT: I'm not sure I understand what that means, "uncollected." MR. PASSARO: Uncollected. The fund members paid two percent of their money after taxes, or $38 a week for somebody working in New York, into this fund. This fund is supposed to be used for payment of only three things, a life insurance policy, disability policy, and a portion to a supplemental type of unemployment. The fund collects approximately 1.2 to 1.4 million a year, comes in. There's over a million that doesn't. THE COURT: I see. MR. PASSARO: In the third interim report of the review officer that was dated December 5th, 2011, he made a statement between pages 14 to 17 that he knew or knew or they SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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100 D2RTUSAC there's at least a million dollars unaccounted for. There's even more unaccounted for, because nothing has been done since then. Can the Court please do something to address that issue? This is the members' money. This is not the union's money. This is not contributions from the employer, the employer physically takes $38 out after taxes of an individual's wages and some of them do not send the money in. This amounts to well over a million dollars. THE COURT: I'll invite comment on that. Thanks. Anybody else? So any of the lawyers want to comment on any of the remarks that were made? Mr. Murphy? MR. MURPHY: At it's meeting on February 13, 2013, the delegate body approved the expenditure of slightly more than $1.7 million to go to the welfare and vacation funds to pay for the administrative expenses that were incurred over the previous six years. So that was done properly. As far as market recovery, there's no market recovery issues with respect to the Wall Ceiling collective bargaining agreement, so I don't really know how to address that. The number of tablets that were actually distributed, our understanding is that we have now inside about 150 of them with Wall Ceiling. On the immediate roll out we're going to need about 250, but they're supposedly coming in every single day, but I can check with the director of operations on that. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

101 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The cost of the tablets, as I mentioned earlier, is borne by the labor management committee. It was a grant of one million dollars. That committee is joint union/management directed, and it is sitting on approximately $12 million, so the district council thought that that would be a good use for that money, and we felt we got a very good deal with the six year guarantee with the new tablets on it. I can't really address anything else. THE COURT: That's fine. MR. WALSH: Judge, with respect to the comment that Mr. Passaro just made about dock builders and the reference in my third report, there has been much done since then. It's a matter for the local union. Since the public revelations by Mr. Moony, the CBA for the International, and my investigation. I actually applied for ten subpoenas and the Court granted those subpoenas be issued, and they were served on contractors who were believed to be behind in remitting the members' money that had been taken out and the check off system. Those cases must be heard through arbitration. That's a provision of the collective bargaining agreement with the GCA and the district council on behalf of the dock builders. Letters were sent out by the then president of the dock builders to initiate collection proceedings, and when they fell on deaf ears, grievances were actually scheduled, and they must go to arbitration in order to collect those monies. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

102 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Now Mr. Passaro was subsequently elected president of Local 1556, the successor local, and did use his best efforts to develop a software program that the local union could use to audit the agreements by the contractors. There has since been a problem in the set up of that program in that confidential personal information of members of Local 1556 was given to a third-party software developer. It's a source of great anxiety and controversy right now for the I think 2,000 members who are affected by the disclosure. That matter was fully investigated by my office. I have no reason to suspect that any illegal or improper use of those Social Security numbers has been made by the software developer. The board has been given a full briefing by myself, and they have retained a very reputable law firm, Meyer Souzzi, to seek the recovery of the confidential information and negotiate a settlement of the fee request from the software developer. So there has been much done since those initial revelations in 2011. THE COURT: Thank you. So here's what I think needs to be done. I've got this package of materials this morning and the proposed order. I'm going to post it on the Court's docket, and I'm going to allow a period if anybody wants to submit any written comments with respect to these materials with respect to the last -before the last speaker asked if they could have a chance to SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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103 D2RTUSAC comment. There will be an opportunity for written comment, and it will probably be a two-week period from today. So I don't know if you have access to the Court's docket, but these materials, that's where they will be posted and written comments will be solicited. That's number one. Number two, it's still a little bit puzzling, the issue of what order I could or should or would enter in light of the fact that the agreement is described as a draft agreement. It would certainly be -- it certainly would be easier, I think, for me to review it if it were a full collective bargaining agreement, signed, executed and approved. So it seems like it might be a little preliminary for me to issue that order at this time. I'm not saying that I won't issue one, but I will take comment and then I will ask you in a minute about what the prospects are for having this full agreement completed. The third issue I wanted to bring up is that in terms of the electronic implementation, I don't see an impediment to that, it seems to me, as a roll out or as a test or whatever you want to call it. I'm not requiring that you do it, but if that is something that you want to put in the works, I don't have any objection to that. So that's where I stand. Do you have -MR. MURPHY: I had a question. Did you receive from my office a revised draft of a proposed order? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

104 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Yes. I haven't had a chance to study that, but I did quickly look at it, and I appreciate that. MR. MURPHY: That incorporates changes that I made, that Mr. Rosen made, and Assistant U.S. Attorney Torrance made also to it. THE COURT: On a quick examination, I saw one or two things that may be a draft that had been left out where you wrote draft collective bargaining agreement, but small things like that, but I didn't really have a chance to study it in detail. MR. MURPHY: Mr. Rosen and I believe that the district council and the Wall Ceiling making our best efforts should be able to include the issues -- really the outstanding issue that was talked about here with respect to the CBA by this Friday. THE COURT: Great. MR. MURPHY: So we're looking to do that. THE COURT: So Friday is the 1st. And then what has to happen for that to be implemented, what approval process? MR. MURPHY: The main approval process would -- well, internally we understand, and in consultation with the review officer and with Mr. Torrance, the deal -- the agreement was approved back on August 22nd, so once the contract -- and the contract represents that. THE COURT: The deal being the MOU? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

105 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. MURPHY: Yes. So once that contract is signed, it will be implemented, and we're looking to -- if it can be executed tomorrow or Friday, we would be looking to implement it on Monday, March 4th. As your Honor stated, we could always roll out the -THE COURT: Technology. MR. MURPHY: -- anytime we want. The real question would be whether or not the Court's May 2009 order should be modified in order to be able to effectuate the full mobility and the wage and benefit increases under the new collective bargaining agreement. So I'm just sort of at a loss as to the process for that. THE COURT: I would rather not enter an order doing that until I had the completed collective bargaining agreement in front of me. MR. MURPHY: OK. THE COURT: But as I say, I have no qualms about rolling out the technology and giving the opportunity for people to comment on these submissions. MR. MURPHY: OK. But would it be possible, if we got the signed final collective bargaining agreement to you on Friday, that the full mobility could then begin on March 4th? THE COURT: That is going to be part of the documents I'm going to post, so I would be reluctant to sign that order. It's without prejudice to you, and ultimately I may well do SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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106 D2RTUSAC that, but I won't be doing that until I solicit and take written comments based upon the document. That would be two weeks. MR. MURPHY: Fine. That would mean then that Wall Ceiling would not then be able to -- until that time, to actual exercise full mobility. THE COURT: I would think so, because I wouldn't be in a position to modify the 2009 ruling until I hear from people who want to make submissions, including yourselves, if anybody wants to. MR. MURPHY: That's fine. MR. ROSEN: Not to be a stickler, but if we come to terms on a final collective bargaining agreement, I assume we can't sign it until your Honor signs an order allowing for full mobility. We can't very well sign an agreement that has full mobility. THE COURT: Why couldn't you do that? MR. ROSEN: It will be contrary to the Court's order. THE COURT: It happens all the time, people sign things subject to Court approval or whatever. I don't think there's any impediment to your executing it. So let's just -- let me give you right now -- so why don't I invite any written comment on the submissions that I receive today by March 12, 2013, and then I will be in a much better position on that date to decide on the order. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

107 D2RTUSAC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 OK, thanks again. Sorry for the interruptions, but I think it was a very productive conference today. Thanks a lot. o0o

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