1 1 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 15 16 16 17 17 18 18 19 19 20 20 21 21 22 23 24 25 D43LUBCA UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES, Petitioner, v.

DISTRICT COUNCIL, et al.,, Respondent. ------------------------------x New York, N.Y. April 3, 2013 11:07 a.m. Before: HON. RICHARD M. BERMAN, District Judge APPEARANCES UNITED STATES ATTORNEY'S OFFICE SOUTHERN DISTRICT OF NEW YORK BY: BEN TORRANCE TARA LAMORTE DENNIS M. WALSH, Esq., REVIEW OFFICER SPIVAK LIPTON Attorneys for Defendant District Council of Carpenters BY: DENIS P. DUFFEY, JR. RAYMOND McGUIRE Attorney for Defendant Dist. Council Fringe Benefit Funds ALSO PRESENT: BRIDGET ROHDE, Esq. DANIEL FRANCO, Pro se 90 CV 5722 (RMB)

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

2 D43LUBCA 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: We're here because of an application by Mr. Franco. And I thought we would, if you were interested, hear from Mr. Franco if he wants to be heard and also from district council and just to take a few minutes and during the course of that, I may have a few questions from you. Is Mr. Franco here? Do you wish to be heard? MR. FRANCO: Good morning, your Honor. THE COURT: If you could speak up. MR. FRANCO: Good morning, your Honor. Thank you for having me. My name is Dan Franco. I'm a Local 157 member. And in February of 2012, I filed charges against Lebo, Bilello, and several other members. I apparently didn't file them properly and I refiled them in July, and I only had enough time and energy to file for Bilello and Lebo. And the charges I filed against them were for -THE COURT: And where did you file the charges? MR. FRANCO: With the trial committee, directly with Walter Mack, by email. THE COURT: And did he say they weren't filed correctly, refile them? MR. FRANCO: He contacted me by saying we have a charge form, because I sent it as a nine-page letter originally. And he said, he responded with we have a charge form for that. And it took a few days to get that charge form SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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3 D43LUBCA but it was an old charge form so I had to get -- I had to get a newer charge form made up. THE COURT: Okay. So that's a document that's a form that says whatever your complaint is, submit it in the fashion described in the form. MR. FRANCO: Yes. THE COURT: Okay. And what was the gist of your complaint against Lebo and Bilello? MR. FRANCO: In particular, the way that Lebo was hired. We have bylaw 10N which allows the EST to delegate certain assignments to other members, other people. But it also states that the person being delegated to has to have the prerequisite skills, abilities, and they have to be able to perform the assignment competently and efficiently. I can read the exact language. THE COURT: I'm familiar with it. MR. FRANCO: Okay. And I don't think all those conditions were met for Lebo. And I also had an issue with that we've had other executives at the top level such as director of operations, Matt Walker; human resources, Dana Brownstein, human resource manager, Dana Brownstein; and over in benefit funds, Joe Epstein -- they were all hired through a hiring process where the job application was sent out, it was posted. Members, people applied for the job, and eventually these three were selected for those jobs. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

4 D43LUBCA 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 This was not done in this case. Lebo was hired based upon cronyism, in my opinion. And I had not known that Mr. Walsh had actively approved and he formally and favorably reviewed this delegation of Lebo until he sent the veto notice to me. THE COURT: When was that? MR. FRANCO: That was in January, January 11, I think. THE COURT: Of this year? MR. FRANCO: Of this year. THE COURT: Okay. MR. FRANCO: And Lebo, Lebo I think was hired improperly. He was hired based upon his relationship with Michael Bilello; he was his running mate. Bilello got elected as EST. THE COURT: Just so the record is clear, EST is the highest level, and it stands for? MR. FRANCO: Executive secretary treasurer, and under that, the president, below that, vice president. THE COURT: So the president is actually below the executive. MR. FRANCO: Yes, your Honor. THE COURT: Do you run for president? MR. FRANCO: Yes. There are eight positions at the counsel -- the EST is the highest, president, vice president, three trustees, conductor, and warden. The three top spots are SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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5 D43LUBCA elected directly by the members of the locals. The other lower five positions are elected through delegates. Lebo and Bilello had won and, in my opinion, it was primarily based upon Lebo becoming president that the delegates agreed to this hiring. THE COURT: Wait a minute. So they won through elections. MR. FRANCO: Yes. THE COURT: Fair and square, so to speak, right? MR. FRANCO: Yes. THE COURT: Open elections. But then what you're complaining about is the fact that Bilello gave Lebo certain duties and responsibilities and compensation; is that the gist of your complaint? MR. FRANCO: Pretty much. To sum it up better would be that Bilello delegated authority to his running mate who got elected as president, but delegated authority as an employee being hired as assistant to the EST. And in my opinion, it was primarily based upon cronyism. THE COURT: I got it. MR. FRANCO: That, in my opinion, based upon what I know about Lebo, he did not have that level of managerial skill and that no interview was done to my knowledge whether to find out that he had that skill. THE COURT: No interview by whom? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

6 D43LUBCA 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. FRANCO: By the council. There's a personnel policy that requires -- there's a personnel policy, there's a policy that states how someone should be hired. And based upon what I know, none of that was done. As far as I know, his hiring was based upon Mr. Walsh allowing it to happen because he thought that Bilello needed a trusted adviser, consigliere, that Lebo was this person. And I had no opposition with him being hired to be an adviser, but he got hired for duties that he could never perform, at a compensation that was above the salary bands. So as far as I know, I addressed this at least twice with Mr. Walsh that 10N wasn't followed. He says it was. So as far as I understood, Mr. Walsh passively allowed this to happen. I did not know he actively approved it until this year in January. So I contested that. I filed charges against them for them not following the bylaws properly and eventually we got -I'm sorry. Bob Makowsky and I filed the same charges against Lebo and Bilello. THE COURT: Filed them separately -MR. FRANCO: Yes. THE COURT: -- or together? MR. FRANCO: I filed mine and he came in as a co-party, I guess you could say. THE COURT: On the same form, so to speak? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

7 D43LUBCA 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. FRANCO: I filed it and he said he agrees to the same charges. THE COURT: I see. And what's the status, if any, if you know, of your charges at the trial committee? MR. FRANCO: As far as I know, they were accepted in July. THE COURT: Of 2012. MR. FRANCO: '12. THE COURT: What do you mean by accepted? MR. FRANCO: Apparently I had filed them correctly the second time. THE COURT: Accepted for filing. MR. FRANCO: Yes. The trial committee chairman, Walter Mack, the trial committee staff had sent me and Bob responses saying that our charges were filed and we had a docket number. THE COURT: Has anything happened with them? MR. FRANCO: No. We filed -THE COURT: I mean did the trial committee send you anything saying we're considering them or we're rejecting them or the case is closed or? MR. FRANCO: They made no comment in that way except to say that we had trial dates. We actually had two trial dates. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

8 D43LUBCA 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: Which were they? MR. FRANCO: On October 5, we were given a trial date of October 18, which on October 17, Bilello had canceled due to the supposed delegate meeting which was moved twice. And then it was suggested for October 25, but I couldn't make it. So we agreed to November 1. And it was October 31 that the trial committee was dissolved. So Walter Mack and Zazzali recused themselves. THE COURT: The trial committee was dissolved? MR. FRANCO: Dissolved. THE COURT: Meaning? MR. FRANCO: The trial committee chairmans were removed. THE COURT: By? MR. FRANCO: As far as I understand it, Bilello, Matt Walker, Danielson, and Mr. Walsh all had a part in having them removed or the trial committee structure dissolved. THE COURT: So there is no more trial committee? MR. FRANCO: I don't know the status of the trial committee between November 1 and when it resumed under the new structure in January. THE COURT: What do you mean by the new structure? MR. FRANCO: In 2010, Mr. Walsh, in my opinion, came up with a very good trial committee structure and it was very independent. It had -- having trial committee chairmans of SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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9 D43LUBCA Walter Mack and Zazzali allowed that trial committee to be very independent of any politics of the council. The regular trial committee structure under the UBC constitution, which was returned to in 2012 after the trial committee in 2010 was dissolved, reconstitutes where the charges go before the executive committee first. And on the executive committee are 13 members, of which Bilello and Lebo were executive committee members. THE COURT: This was true in 2012 or now? MR. FRANCO: Yes. They were all executive committee members since they got elected, but the executive committee members had nothing to do with the 2010 trial committee structure. THE COURT: I'm talking about 2012. MR. FRANCO: In 2012 it was returned to the normal UBC structure except for instead of the trial committee chairmans normally having been like the EST or president, we had independent trial committee chairmans. We had three of them. But it still went back to the executive committee for them to review whether the charges were filed timely or properly. THE COURT: In 2012. MR. FRANCO: In 2012, yes. THE COURT: And did any of that happen or you say it got dissolved? I don't understand exactly what you mean. MR. FRANCO: The 2010 trial committee structure was SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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10 D43LUBCA dissolved. THE COURT: I thought you just said a minute ago it was 2012 it got dissolved, no? MR. FRANCO: No, the 2010 trial committee structure under Mr. Mack and Mr. Zazzali, that was dissolved by October 31. THE COURT: October 31 when? MR. FRANCO: 2012. And then between that time and January, a new trial committee structure was created, which was almost the same as the UBC structure except for the independent trial committee chairman in 2012. So my charges went before that executive committee in January of 2013. And at that meeting Mr. Walsh attended, and the next day he sent me a letter that my charges can't be entertained by the executive committee because he's already favorably and formally reviewed Lebo's appointment. THE COURT: Is that the notice of veto or is that a separate letter? MR. FRANCO: Yes. Mr. Walsh -THE COURT: Which? MR. FRANCO: -- sent me in January of 2013 a notice of veto. THE COURT: Right. MR. FRANCO: The day after we met with the executive SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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11 D43LUBCA committee about my charges. THE COURT: Okay. I got it. So that's the end of it as far as -MR. FRANCO: As far as I know, my charges were squashed. THE COURT: What about your co-complainant, same? MR. FRANCO: Yes, they were. The whole charges against Bilello and Lebo were squashed. THE COURT: Okay. Does that bring us to your application here? MR. FRANCO: Yes. So I appealed Mr. Walsh's veto against the process to entertain my charges. THE COURT: I see. Okay. I get it. Anything else I need to know? MR. FRANCO: Well, if I have the power to do so, or I'd like to make a recommendation to this Court. Based upon what has occurred over the last year since Bilello/Lebo got in and all the failures that have been happening at the council that have just been longstanding, that have been happening since the first day that they got in that I'd like to make a recommendation to the Court to order the council to have at delegate meetings and other such meetings of council a parliamentarian, a court reporter, because the meeting minutes have been atrocious from the beginning. THE COURT: How are the minutes kept now? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

12 D43LUBCA 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. FRANCO: How are they kept? THE COURT: Yeah. MR. FRANCO: I don't even -- it used to be Paul Tisner that was keeping the meeting minutes from the beginning. THE COURT: You mean manually? MR. FRANCO: As far as I understand, yes. THE COURT: You're suggesting a court reporter, a stenographer who takes down everything. MR. FRANCO: Correct, yes, because a lot of things are missed at the meetings. And I don't know if that was intentionally omitted at times, but a lot of it doesn't get in there, particularly the more important points. For example, John Musametti had made certain comments and they were left out of the record. THE COURT: I get it. MR. FRANCO: Several times certain things were left out of the record. If I was to win my charges against Bilello, Lebo, I wasn't going to move to have them removed. What I wanted was for the council to have a parliamentarian. THE COURT: They were elected, right? MR. FRANCO: Yes, but we can have officers removed. If we bring charges against them and if they're found guilty, we can move to have them removed. THE COURT: What -- I don't know if the question is SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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13 D43LUBCA were or are you seeking? MR. FRANCO: I am seeking for counsel to have a parliamentarian at every one of those delegate meetings and every other meeting at the council so that they know the rules. When they don't know the rules, they can refer to the parliamentarian. On top of that, the meeting minutes, the record of those meetings have been incomplete; and I would like those meeting minutes to be kept much better. THE COURT: So by much better if you had a stenographer. MR. FRANCO: Absolutely. And on top of that, I would like to go back to the 2010 trial committee structure because the new structure, which is almost the same as the original UBC structure, is, as Mr. Walsh has said in the past, potentially a kangaroo court. It has been a kangaroo court in the past and I'm seeing that now. THE COURT: The part I'm confused about, I thought you said Mr. Walsh and others had revised the trial committee for 2013. MR. FRANCO: It's slightly -- the 2010 structure that Mr. Walsh came up with in 2010 was two trial committee chairmans, a chair and cochair, and just the trial committee, which at the time was two members from each of the locals and SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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14 D43LUBCA eventually it was three members from each of the locals. That structure was highly independent, particularly with Walter Mack and Zazzali. That was dissolved in October. THE COURT: Of two thousand? MR. FRANCO: Of '12. And by January 2013, the new structure was in place, which is almost the same as the regular UBC structure except for instead of having the trial committee chairmans, normally EST or president, we had independent chairmans. We had three independent lawyers, outside counsel. THE COURT: So you think that would be better, right? MR. FRANCO: It's slightly better than the old system, but not as good as the trial committee under Walter Mack and Zazzali. THE COURT: Because of those personalities or some structural reason? MR. FRANCO: Because politics can play into it quite a bit. Because under the newer structure, we have the executive committee where when we refer charges, they get to look it over first. We have that level that can get rid of charges. The next level is the trial committee. THE COURT: Right. MR. FRANCO: After that, they make a recommendation now to the delegate body and then the delegate body decides whether to support the recommendation of the trial committee or not. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

15 D43LUBCA 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 as we've seen at the last delegate meeting, the delegates didn't like that. They were wondering why they're being come to with the trial committee recommendations. And eventually it's either they're going to uphold the trial committee recommendations. But my concern is when you have high-level officers and executives of the council that are -- I brought charges against Bilello. There's no way, at least in my opinion, that I can get a fair trial now under this structure because I brought charges against one on the executive committee which eventually, if they were found guilty, goes to the delegate body, which has been two-thirds in support of the council for basically everything. So it's highly unlikely that my charges, if the trial committee finds them guilty, that they'd be upheld by the delegate body. That's why under the 2010 Mack/Zazzali structure it was highly independent. There wasn't that three level of -three levels. There was only that one level. THE COURT: I get it. Thanks. MR. FRANCO: Thank you. THE COURT: Who wants to go next? MR. WALSH: May it please the Court, my name is Dennis Walsh. I'm the review officer. I'd first like to bring to the Court's attention and all who are gathered here today that I have the deepest respect SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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16 D43LUBCA for Dan Franco. Dan has been a committed union activist for many, many years. He is an archivist. He keeps a website of important court documents; he collects them. He goes to all of the delegate meetings to sit in the gallery. I have engaged in dozens of email exchanges with Dan over the years. When I was first appointed, we spent a couple hours in my conference room just talking about the challenges and the history of the carpenters union. And I wish there were more people like Dan, who were as committed as he is to institutional reform and union democracy. So I want that clearly understood at the onset. I do not criticize Dan for wanting to participate in this question of the propriety of Section 10N of the bylaws. What I have done is strictly limited to an express policy question that having participated in scrutinizing this process from the first moment that I understood that EST Bilello wanted to use Section 10N to delegate authority first to Bill Lebo and then to Mike Cavanaugh, I brought his attention to the strictures of Section 10N. THE COURT: You mean brought Bilello's attention. MR. WALSH: Yes, and he complied with that fully. He wrote out all of the duties and responsibilities. They were delivered to me. I looked at them. They were vetted by the executive committee, which made a recommendation and approved the delegation of authority as required by the bylaws. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

17 D43LUBCA 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: From Bilello to Lebo. MR. WALSH: Yes, and then also a week later or so to Cavanaugh. And the expenditure for the proposed salary had to be approved, submitted to and approved by the delegate body, and it was. And Bilello even read out the written delegation of authority to the delegate body. So in my view at the time it was done appropriately, it was imperative that it be done within the letter of the bylaws, and it was in my view. Just a point of clarity on the transition from the trial committee to what we have now. THE COURT: Before you get to that, because this is the one central issue is the propriety of the delegations and the salaries. So one thing I thought in reviewing the submissions was that there didn't appear to be any kind of paper trail, and I thought that was actually a defect in terms of confidence or paper trail. Here, for example, in this case that we have that I preside over, you have no idea -- well, you probably do, actually. I put everything on the record when I get it, but it's actually quite helpful because there's a very clear paper trail. Some writings are more serious than others. But everything goes on the docket, and contemporaneously everybody knows what everybody did, and if there's a why, they know that too. I thought that in this case with respect to this SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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18 D43LUBCA delegation and the finances there could have been a better paper trail or some -- I don't know exactly what it would say, but, you know, leave that to you. But I thought that would have been helpful here. MR. WALSH: Your Honor, we went back and looked at the record after Mr. Franco filed his charges. And, you know, in my view at the time, this was no different from any of the dozens of reviews right down to whether a local union can spend $100 to buy flowers. THE COURT: But this is $185,000. MR. WALSH: Yes. The record was clear that from the minutes of the executive committee meetings in question that Mr. Bilello had done this, that I attended, that I actually spoke at the executive committee meeting, that I attended both of the delegate meetings where the salaries were put before the delegate body. THE COURT: I must have missed that. So there are documents that show you spoke and what you said? MR. WALSH: There is the meeting minutes for both of the executive committee meetings that reflect my presence. And I was at the delegate body meetings both times, for the Lebo delegation and for the Cavanaugh delegation. THE COURT: Do they reflect your presence or your actual review of these detailed job descriptions? MR. WALSH: I don't know whether the delegate meeting SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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19 D43LUBCA minutes -- I know that I sign in at delegate meetings routinely; I don't know whether the very first delegate meeting that was held on January 11, 2012, whether that was a fact. But I can certainly attest to the fact that I was present at the meetings. THE COURT: I have no doubt. I understand that. MR. WALSH: So it was -- it has not been my practice because of the volume, and I certainly grant that there are matters of greater import that perhaps might be better served by an actual written document saying it. THE COURT: It seems to me this would be one because Mr. Franco is saying he didn't learn about your role -- whether he saw you there or whatever or heard you, I don't know, but until he got the notice of veto in January 2013. And because this is of some significance, I do think this would be -- we write about everything else here, so something like this would have been better served with some writing. MR. WALSH: Judge, there have been no question because everyone saw me at all those meetings that anybody had questioned it, and Mr. Franco is the only person other than Mr. Makowsky who, to my knowledge, has raised any question about the propriety of the delegation of authority. The progression of the trial committees was that there was a new trial committee system chaired by Walter Mack and vice chaired by Jim Zazzali, which your Honor is aware. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

20 D43LUBCA 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: When Mr. Franco is saying that's the 2010 structure -MR. WALSH: They were installed in 2010, and the committee itself was composed of rank and file members selected at the local union level in elections. THE COURT: Okay. So here, so we're moving from the issue of the heart of the matter, so to speak, and now to the trial committee. And here it's helpful that you explain it, but one thing that is a little confusing in this matter that Mr. Franco raises is the interplay -- first is the structure of the trial committee, which you're about to address. So that is really important. And, second, the interplay of the notice of veto and the operation of the trial committee. So one -- one being me -- you might suppose or surmise that the two operate on sort of different planes, as it were, so you do what you do, which is approve, for example, in this case Bilello and the delegation, but that the trial committee, if this is what it's there for, is sort of an independent body and it does what it does. And one could imagine, I could imagine that when Mr. Franco files with the trial committee, perhaps apart from the notice of veto or in lieu of that, you might make a submission to the trial committee and say this matter, I notice, you know, the charges have been filed here and you as the review officer don't think there's any merit to these SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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21 D43LUBCA charges because you, in fact, particularly on such and such date approved of this thing. And then the trial committee would be in a position to say oh, well, got this submission from Mr. Walsh and it does whatever it does, for example. It's a little confusing the interplay between the notice of veto and the work that one might think otherwise that the trial committee might do or the stage in which there's an intervention by you in the trial committee process. Do you know what I mean? MR. WALSH: I can address that, your Honor. Under the Mack committee, which was in place from early or mid-2010 through October 31, 2012, and it finished its work through November. And there was a bright line cutoff in the decision that I published dated October 31. It said that any case that this opened would be finished. THE COURT: Under the old structure. MR. WALSH: Yes. Mr. Franco's case had not opened. So it along with dozens of others was then scheduled to be heard under the UBC Section 52 framework, with the exception that there were independent lawyers who were hired by the council -- after a lengthy interview process and many applications -- to preside as chairpersons of the committee. Now, under the UBC Section 52 program, the executive committee of the council has a limited function to basically scrutinize the four corners of the document to make sure it has SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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22 D43LUBCA been timely filed, kind of statute of limitations vetting, and that there is a properly articulated claim under the UBC constitution. And there are a dozen or so enumerated offenses there, including bylaw offenses and work rule offenses at the district council level. THE COURT: That's the first step? MR. WALSH: That's the sole function of the executive committee, to -THE COURT: Screen. MR. WALSH: -- screen to decide whether it has been a properly filed document with proper allegations, proper charges, and then it would be referred to the trial committee. THE COURT: So are Bilello and Lebo on that executive committee? MR. WALSH: They are on the executive committee. They obviously would have had a conflict of interest. Mr. Lebo had resigned by the time Mr. Franco's charges got to the executive committee. THE COURT: And what about Bilello? MR. WALSH: Bilello I don't recall being in the room and I would have remarked. THE COURT: So he would have recused. MR. WALSH: Obviously a recusal situation. What crystallized for me in observing that meeting was that there was a kind of preemption issue presented, that I had SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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23 D43LUBCA always operated within the four corners of the stipulation and order and felt that not only was it proper, but required that if an official function had occurred and I had determined that the district council bylaws had been respected and that indeed I had closely scrutinized from the beginning to the end of the process, that it was simply not permitted by the stipulation and order that a rank and file committee composed of five members could supersede the decision of the review officer and decide perhaps for political reasons or personal reasons, that it would indeed present an opportunity for chaos because there's no limit to charges that can then be brought, for instance, regarding local union expenditures, that persons who disagree with the propriety of an expenditure under 29 U.S.C. 501 would then bring charges against a union official for having the idea in the first place after I had received notice of the proposed expenditure and found that it was fine. THE COURT: So have there been -- that's really my question as to when you would weigh in. So, for example, I'm not -- I don't recall myself. Have there been other notices, notice of veto that short circuit the trial committee charges? MR. WALSH: Yes, and with the Court's permission I'd like to hand up a notice of veto that I promulgated just a week or so later. It related to charges brought by Mr. Lebo against John Musametti, and I felt that they impinged on Musametti's free speech rights under 29 U.S.C. 411. And I wrote out a SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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24 D43LUBCA nine-page opinion as to why I felt that the executive committee process of referring those charges to the trial committee was improper and perhaps indeed illegal. So, I've done it twice now. THE COURT: Let's take the latter case just so I get the process. So charges are brought in the second case. They're lodged with the executive committee and the executive committee is doing whatever it's doing; and you file a notice of veto or a document like a brief, so to speak, saying these charges are improper because whatever reason? MR. WALSH: It was a notice of veto, your Honor. THE COURT: I see. MR. WALSH: And the reason why it occurred at that stage is because I am required under the stipulation and order to respect the specific authority that I am granted. And the veto provision in Section 5B applies to certain procedures of the district council and, in my view, the procedure of the executive committee referring charges to the trial committee is plainly within that section. And so I felt it was appropriate and I was acting within my authority to take action, and I cited specific provisions of the stipulation and order in making that decision in both cases. THE COURT: In Mr. Franco's case, he filed with the executive committee, right? MR. WALSH: He filed with the original trial SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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25 D43LUBCA committee. But those charges had not been heard by the time that committee procedure had been changed to the new one. THE COURT: So he, in effect, he came under the new system, right? MR. WALSH: Through adjournments. THE COURT: Now, were his charges referred then to the executive committee? MR. WALSH: They were. And the first reading, as it is called in union parlance, occurred on the afternoon, early evening of January 11, 2013. So that was the first public airing, the first procedural airing of his charges, and I was in attendance that evening. THE COURT: And like the second instance, were his charges referred by the executive committee to the trial committee or not? MR. WALSH: I believe they were not because I had intervened at the time to express my opinion that indeed they could not be because of this what I would call the preemption issue. THE COURT: But it's the same -- it's similar to your second. MR. WALSH: It's very much the same. And the idea is that it is the same that the trial committee itself, five rank and file members, is not in a position to decide whether Section 411 of Title 29 has been violated or, indeed, whether SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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26 D43LUBCA those charges should indeed be considered by the executive committee because they may actually be illegal, that his union free speech rights might have been violated, and that the union might be subject to damages at that point. THE COURT: So what I'm trying to figure out though from Mr. Franco's and is when is the right time and what is the mechanism for you to intervene and is it better to wait until after the executive committee -- what if the executive committee, for example, decided not to file this with the trial committee for the same reasons that you might have suggested because you had approved something. So that's what I'm trying to get at: When do you step in? MR. WALSH: Judge, in both instances, the executive committee procedure had begun. They were considering the charges. It was part of their business, part of their agenda for the meeting. So in my view it was plainly within the scope of the district council procedure provision in Section 5B of the stipulation and order. THE COURT: Do you think it's -- in one instance they actually made a determination to refer it. That's the second one, right. In this, in Mr. Franco's, they hadn't made a decision, I don't think. MR. WALSH: No, I don't believe so. THE COURT: They were in the process, but they had not said we're going to refer this to the trial committee. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

27 D43LUBCA 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: But the process had begun. THE COURT: Right. It's just information. It's a question, when does it make more impact, so to speak, or when might it be better for you to step in. MR. WALSH: I clearly thought at the time that it was appropriate if for no other reason that people's time and energy and the resources of the council are implicated by allowing something to go forward which I thought was problematic, and I thought that was a fair way of looking at it. THE COURT: That's true with both of those instances, both Mr. Franco and the one a week or two later. MR. WALSH: Yes. If the Court would like to have a copy of that second veto. THE COURT: That might be helpful. What I'm wondering is if there is any benefit for having the executive committee take an action and then you intervene and say -- so, for example, if they said no, we're not going any further with this because we know, for example, that the RO has approved this hiring, that would be the end of it and there wouldn't need to be a notice of veto, right? MR. WALSH: I have two thoughts, your Honor. THE COURT: Okay. MR. WALSH: No. 1, I am not fully content with this version of the trial committee. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

28 D43LUBCA 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: You mean -MR. WALSH: This new one that resulted in my decision that the district council should have an opportunity to use the UBC's own process with the caveat that they must have an independent outside trial chairman. THE COURT: Okay. MR. WALSH: I actually asked the former chairman, Walter Mack, to observe; and I have observed a couple of these evenings myself. I've had people on my staff observe them. And I'm actually in a dialogue with Mr. Mack right now about what changes might be made to that committee. So if I make that decision, we may not have to worry about the executive committee going forward. And I believe I will be making that decision soon. THE COURT: I see. MR. WALSH: With respect to if the executive committee continues to play a role, they I think were trying to perform their job within the expectations of the UBC Constitution Section 52. It presents yet another conflict though with the situation that we face in New York with the consent decree and the stipulation and order where there are numerous exceptions to the UBC standard nationwide. And the executive committee and the UBC constitution is ill-equipped to deal with situations like the one that was presented by Mr. Franco's charges. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

29 D43LUBCA 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 But I think that going forward, one of the screens, one of the tests that the executive committee would have to apply separate and apart from Section 52 would be does this implicate the consent decree, the stipulation and order, or official action of the review officer or the district court. And in situations like that, they should pause, they should be allowed to consult with counsel for the district council, give me notice that there is a situation in their view and having consulted with counsel might be inappropriate for them to consider in the first place or refer to the trial committee. THE COURT: Right. MR. WALSH: And I think that through notice to me and that dialogue with counsel that an appropriate outcome could be crafted, if we keep the system looking pretty much like it is now. THE COURT: I see. So now no counsel unless they ask for counsel? MR. WALSH: There is no counsel present in the room. There is no counsel present either for the executive committee or for the trial committee. The chairman under Section 52 has enumerated powers which I believe are deficient, frankly, and it has not taken me long, only a few months now, to develop these reservations about the Section 52 proceedings -THE COURT: I got it. MR. WALSH: -- as being viable in New York. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

30 D43LUBCA 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: Okay. That's very helpful. So it seems to me that a trial committee serves a very valuable function, right, in the abstract. MR. WALSH: Absolutely. THE COURT: And so you're endeavoring to make it as effective and appropriate as possible. So it sounds like there's some changes on the way. MR. WALSH: Judge, I would try to make it as effective and appropriate throughout my tenure. If I felt that a third iteration was deficient, I would not hesitate to try to fix it because my original intention in 2010 -- and I spent a great deal of time writing these rules -- was to preserve the autonomy of the trial committee, to preserve fairness as an imperative, having personally observed back in the nineties and participated in the old bad trial committee system, which was deplorable. And New York City needs an unquestionably fair system, and I'm committed to getting there however much work it takes. THE COURT: And I don't need to get into the weeds, so to speak, because I certainly would get it wrong. But even some of the thoughts you were just saying, suggestions, would obviate the need for you as the RO to have to issue a notice of veto if it were part and parcel of the normal procedure that if it implicated an act that had already been approved by the RO, you'd be contacted or you'd be involved in this sort of a brief SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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31 D43LUBCA or amicus or whatever it is. MR. WALSH: Judge, my thinking from the beginning of my tenure was institutional reform that's codified, which is bigger than one person's ability to vitiate. That's the institutional reform we need that every time I have to do something, it is a cut in the union. And what we need is a self-sufficient body, and that's been one of the recurring themes of my reports to the Court. THE COURT: That's one of the issues that I notice in here as well. Got it. MR. WALSH: I think that also goes to Mr. Franco's excellent point about the delegate meetings. In the last report I did remark on my disappointment about the progression of democracy in the district council. And there is still tremendous need for improvement. Meetings are too long. Meetings can disintegrate into shouting matches. And I don't think I have too exalted a vision for these meetings that they be done quickly, efficiently, and collegially. Otherwise, we can call it a failure, your Honor. THE COURT: What about his idea about a court reporter? MR. WALSH: Well, the meetings are recorded. They are digitally recorded. In spite of the protests of the union, I know that recording goes on in the member gallery, that sound bites have been posted on the internet. The union prohibits SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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32 D43LUBCA this. I don't know why. I think that they have a very strangled view of transparency. Having dealt with matters where truly confidential information is at stake, I don't see that anything is tremendously confidential. I have advised them that they should go into executive session and warn the gallery that they are going into matters that are highly confidential, that may involve collective bargaining strategy or legal strategy, and they should please respect that it is for the good of the union that they not record. THE COURT: Those are personal recordings? MR. WALSH: Yeah. My own view in my town halls is that everything should be recorded. I know it's going to be posted on the internet. And I think that the more information that gets out to the membership, the better. THE COURT: So there is a formal mechanism for recording digitally. MR. WALSH: Yes. THE COURT: Is that stored? MR. WALSH: It is stored by the chief compliance officer. It is available under the policy, which I condone, of the compliance officer for member scrutiny. They can come in, like going to a language lab after school in the old days, and listen to the recordings and find out what your delegates said from your local or listen to the whole thing. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

33 D43LUBCA 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 minutes are very bad. I've already spoken to the district council leadership once about the minutes. We just went through an issue where my team had to go back into the recording to find what was actually the substance of a motion when in fact the minutes reflected something which was absolutely contrary to what was actually said at the meeting. And this is something that has to be done. These meetings have got to get better. And there was a parliamentary issue that arose at the last delegate meeting where I spoke to counsel for the union on the question, and he advised the chair that the course they were about to take was incorrect under Robert's Rules and the UBC constitution, which comes first in the order of procedure. So I'm grateful for Mr. Franco's suggestions. They are consistent with things that I've been thinking. And I share his and all like-minded members' concern about the progress of democracy in the delegate body. THE COURT: And what about a parliamentarian or lawyer present or somebody who knows how to? MR. WALSH: Mr. Murphy, who's the general counsel for the union, has been attending these meetings. He was assisted by one of his colleagues from Spivak Lipton at the last meeting. And I think that people who think that procedure is about to be violated need to be very active about that. Delegates need to inform themselves about the UBC constitution, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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34 D43LUBCA which has very specific orders of procedure in the back of the pamphlet, and when they don't cover an issue, Robert's Rules apply. So if there was someone who could be retained to serve as a parliamentarian, I think that would be fine. THE COURT: And who would do that? MR. WALSH: I believe there are actually people who are certified parliamentarians who are experts in Robert's Rules. But, again, Robert's Rules kick in after the UBC constitution fails to address a particular point. THE COURT: It almost appears it's really more of a counsel than a parliamentarian or it's both? MR. WALSH: Well, they're certainly benefiting, I think, from counsel being present. THE COURT: He's present in an official role or he's just there? MR. WALSH: He sits off to the side and is active in going back and forth to the dais as he perceives there to be a point that he must clarify for the chair or for the president or the EST. The president of the district council presides and is the one person in the room who must be right every time there is a question of order and procedure that's raised from the delegate body. THE COURT: Does he, by the way, counsel, who does the minutes? Perhaps he should do the minutes. MR. WALSH: Under the bylaws, well, that is in fact SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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35 D43LUBCA the way it's done at the benefit funds that counsel, outside counsel has been preparing the minutes, which are in my experience uniformly excellent. And so I think that, you know, counsel could do it and would do a very good job but, again, it's outside I think where the UBC constitution contemplates this is to be done. The EST has the responsibility for preparing the record of the meeting. It was delegated to one of the executive committee members, a fellow named Paul Tisner who I believe is still doing it. He may actually be assisted by one of the administrative assistants who also takes notes during the process in an effort to get the best possible minutes promulgated. THE COURT: Maybe counsel ought to be put in that process either to review the minutes -- I'm familiar with minutes and meetings, etc., as everybody is, and there are correct minutes and incorrect minutes. And so unless there's someone who can supervise and compare what was said at the meeting to what the minutes actually say, it strikes me that nobody is going to have much faith in what the minutes indicate. MR. WALSH: Judge, the district council is represented here today, and I would here in court make that recommendation to the district council. THE COURT: Okay. Thanks. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

36 D43LUBCA 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 Who else? MR. DUFFEY: Denis Duffey for Spivak Lipton on behalf of district council. THE COURT: So there's a recommendation just made. It sounds like a good one. MR. DUFFEY: Yes. I definitely absorbed that recommendation, and we will discuss it with our client and respond to the review officer. Aside from that, we have nothing to add to the review officer's presentation of the issues. THE COURT: What is your role in the meetings as you see it? MR. DUFFEY: I personally have not attended the meetings, but I think based on my understanding -THE COURT: Who goes? MR. DUFFEY: Jim Murphy from our office goes. And I believe Adrian Healey, another colleague of ours, has attended the meetings as well with Mr. Murphy. And I think the review officer described the role accurately which is to advise the president and officers as to any issues that arise, including of particular relevance to the issues here. THE COURT: So if they go and something happens, does that mean that they've approved it? MR. DUFFEY: Well, it's a good question. THE COURT: My point is you're either in or you're SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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37 D43LUBCA out. So if you're going and if you are the counsel and something happens, you know, one could fairly conclude that it was approved by counsel or certainly wasn't objected to by counsel. MR. DUFFEY: Well, I think that that does -- I would agree that's a fair inference. I'm not entirely sure what the understanding between the officers and Mr. Murphy has been on -THE COURT: I get it. MR. DUFFEY: -- how that works. But I understand that and I think it's true that it's been helpful to have someone from our office and it's usually been Mr. Murphy present. THE COURT: I'm sure it's helpful, but I'm making a different point here and I think you need to discuss this with Mr. Murphy. Unless Mr. Murphy wants to get tagged with all the results of the meetings, or maybe he does, or if he didn't, then there would have to be some way for him to object or some legal notation perhaps in the minutes that he was consulted and thought this or he wasn't consulted or he thinks that this is not what should be reflected. It seems to me there needs to be a tighter involvement, is what I'm trying to say, of counsel at these meetings. MR. DUFFEY: Tighter and clearer, understood, your Honor, understood. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

38 D43LUBCA 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: Absolutely. MR. DUFFEY: Thank you. THE COURT: And including particularly in the minute taking aspect. MR. DUFFEY: Understood. THE COURT: Anybody else? Mr. Torrance. MR. TORRANCE: Thank you, your Honor. No, I don't think the government has anything to add at this point. THE COURT: So I noticed somewhere in the materials I think, Mr. Torrance, that, unless I misread them, that you need to be consulted or do you have to give an okay to the delegation from Mr. Bilello and Mr. Lebo? MR. TORRANCE: No, your Honor. The U.S. Attorney's Office is not involved in that particular process. There are -- and I don't have them at my fingertips -- there are certain procedures that I think under the original consent decree without the presence of a court-appointed officer that might need consultation with the U.S. Attorney's Office. THE COURT: You think this is not one of them. MR. TORRANCE: This was not one of them. THE COURT: But from your observation, you think it went the way it's supposed to go? MR. TORRANCE: It does appear that it did. We rely on the review officer's assessment of that. But it does, to be SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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39 D43LUBCA frank, and let me just as an aside emphasize Mr. Walsh's point that Mr. Franco has been a force for the benefit of the union for a long time. It's been a long time since I myself have talked to him, really since the Forde administration left. But during the Forde administration he was a constant force for reform. That said, this does sound like a disappointment in a lost political battle. It sounds like Mr. Franco doesn't like the particular person who was hired. But it strikes me at least as unexceptional that the top officer of a union would delegate to his running mate certain authorities, and it seems perfectly appropriate that that was done. THE COURT: The way it was done. MR. TORRANCE: Yeah. I understand that Mr. Walsh's point to be that he can't, you know, one of the grounds for a veto is that it's inconsistent with the objectives of the stipulation. Of course, one of the objectives of the stipulation is that the review officer reviews the union's activities, certain of them, and approves them. And to allow the trial committee to supersede that, I think it's a fair reading to say it's inconsistent with that. THE COURT: So you get the last word, Mr. Franco, if you want it, just very briefly. It's your application, so. It sounds like the concerns you raised were valuable ones, but it also sounds, to me, anyway, like they've been SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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40 D43LUBCA addressed here today as a result of your raising them. Do you feel that or not? MR. FRANCO: No, I do not, your Honor. THE COURT: No. MR. FRANCO: My argument is that the bylaws were not followed and the personnel policy was not followed and it was made a special exception for Lebo to be hired as assistant EST even though he didn't have the prerequisite skill. THE COURT: Okay. I got that. Okay. MR. FRANCO: He was just not qualified for the job yet he was approved. And I think it was all based on cronyism, to put it plainly. But for the parliamentarian, what the parliamentarian would also need to know is the UBC constitution, the district council bylaws, and any other policy that would be applicable at the time in the meetings. So that parliamentarian would have to know the UBC constitution and bylaws. In addition to that, I forgot to include that part of what I wanted to achieve was to have classes for the executive committee, the executive board, and the delegates on the UBC constitution, the bylaws, and Robert's Rules of law because the majority of them, based upon what I observed, have no idea what they're doing. They don't even carry the bylaws with them. They don't refer to them. They just go along with whatever is recommended to them. And two-thirds of the delegate body, it's SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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41 D43LUBCA usually two-thirds, just say yes to whatever the council is asking them. Thank you very much. THE COURT: So this has been very helpful. Some of the issues I think that ought to be and are being addressed right away is this revitalization or reorganization of the trial committee process. I think that needs to happen ASAP. This issue of a parliamentarian seems to be a valuable one, but actually I think it's more of a legal person because from what I'm hearing I think the issues that need to be resolved are less -- or maybe I'm wrong about this, but less process or procedure than substance or legality. But I'll leave that also to all of you. I think that does need to be resolved sooner rather than later. But as to the actual substance, and I'll have to take a look at the minutes of today and further look at the submissions, but it does appear to me that you, Mr. Walsh, were involved and did give your approval and authority and that you had the authority and the power to do that, so, just that. And the other issue that I raised before too, I think maybe it would be helpful to give a little more attention to when something should be reflected in writing so that others can see it versus just being there, as it were. So, anyway, I will address your application in writing in the near future. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

42 D43LUBCA 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. FRANCO: Thank you. THE COURT: Thanks very much. o0o

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