U.S. v. District Council of New York City

• Decision Date: 13 January 2009
• Docket Number: No. 90 Civ. 5722(CSH).,90 Civ. 5722(CSH).
• Citation: 592 F.Supp.2d 708
• Parties: 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.
• Court: U.S. District Court — Southern District of New York

592 F.Supp.2d 708

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.

No. 90 Civ. 5722(CSH).

United States District Court, S.D. New York.

January 13, 2009.

COPYRIGHT MATERIAL OMITTED

Benjamin Torrance, AUSA, Kristin Vassallo, AUSA, New York, NY, for Plaintiff.

Gary Rothman, Esq., O'Dwyer & Bernstein, LLP, New York, NY, for Defendants.

Loren L. Forrest, Jr., Esq., Frederick Braid, Esq., Holland & Knight, LLP, New York, NY, for BCA.

Scott A. Gold, Esq., Holly Weiss, Esq., Schulte Roth & Zabel, LLP, New York, NY, for Wall-Ceiling Association.

Joseph Kaming, Esq., Kaming & Kaming, New York, NY, for Cement League.

Mark A. Rosen, Esq., McElroy Deutsch Malvaney & Carpenter, LLP, Morristown, NJ, for GCA.

Lyle S. Zuckerman, Esq., Kauff McClain & McGuire LLP, New York, NY, for CAGNY.

James Issac Wasserman, Esq., Vladeck, Waldman, Elias & Engelhard, P.C. New York, NY, for Eugene Clarke.

Eugene Clarke, Esq., New York, NY, pro se.

MEMORANDUM OPINION AND ORDER

HAIGHT, Senior District Judge.

In United States v. District Council of New York City & Vicinity of the United Brotherhood of Carpenters and Joiners of America, 229 Fed.Appx 14 (2d Cir.2007), the Court of Appeals, reversing this Court, held that the District Council (also referred to as "the Union") was in contempt of the Consent Decree entered in this civil RICO action commenced by the Government. The Court of Appeals remanded the case to this Court for the fashioning of a proper remedy. This opinion sets forth that remedy.

I. BACKGROUND

A. Procedural History

Familiarity is assumed with all prior decisions of this Court and the Court of Appeals, the Consent Decree, and the Job Referral Rules incorporated into the Consent Decree. This opinion recites the factual background only to the extent necessary to explicate the nature of the District Council's contempt and the remedy fashioned by the Court.

Rule 5(A) of the Job Referral Rules required union members on the out-of-work list ("OWL") to be "referred to jobs in the order in which they have registered their availability for referral." Rule 5(B) provided: "Requests by an employer for specific members employed by the employer within the previous six months shall be fulfilled, as required by applicable bargaining agreements." Other provisions of the Consent Decree incorporated the Job Referral Rules attached to the Consent Decree into the Union's By-Laws, and directed the constituent local unions to adopt the Rules and make all job referrals in compliance with them.

Paragraph 12 of the Consent Decree required the Union to give the Government prior written notice of any proposed changes to its By-Laws, and inform the Government "of any changes in any rules or procedures adopted or implemented" pursuant to certain paragraphs of the Consent Decree, from the date the Consent Decree was implemented to seven years "after the termination of the Investigations and Review Officer's term of office," which ended in June 1999.¹ The Job Referral Rules fell within Paragraph 12's notice requirement. If the Government objected to a change proposed by the Union, the Union could "apply to the Court for a determination as to whether the proposed change is consistent with the terms and objectives of the Consent Decree"; otherwise, the change would not occur.

When the Consent Decree was entered, almost all the Union's collective bargaining agreements ("CBAs") contained a "50/50 Rule" that authorized the Union to assign 50 percent of the carpenter work force at a particular job site, with the employer/contractor company² designating the other 50 percent.³ Although all carpenters at a job site had to be members of a District Council constituent local union, those carpenters assigned by the Union were commonly called "Union workers," while those selected by contractors were termed "company workers." The interplay of the 50/50 Rule and Job Referral Rule 5(A) created a major source of job opportunities for union members on the OWL who had been seeking work for the longest time. This effect was lessened somewhat by Job Referral Rule 5(B), which permitted employers to request workers who had worked for them in the previous six months. Carpenters requested by an employer pursuant to Rule 5(B), also referred to as "the six-month rule," were designated "Union" workers for 50/50 Rule allocation purposes.

In CBAs negotiated in 2001, the District Council granted a concession to certain associations of contractors which eliminated the practical effect of the six-month rule, that is to say, the 2001 CBAs gave a contractor the right to request a particular carpenter for a job site and have that carpenter count against the Union's 50 percent allocation, regardless of whether that carpenter had worked for the requesting carpenter within the past six months. The 2001 CBAs thereby gave a contractor an unfettered right to select all the carpenters on a job, by permitting the contractor to pick the 50 percent Union contingent of carpenters who, under the previous CBAs, the Union had assigned to contractors in chronological order from the OWL (except for the limited effect of Rule 5(B)), in addition to the contractor's own 50 percent. The contractors and the Union refer to this entitlement conferred by the 2001 CBAs as the "Request System." I will use the phrase in this opinion. The Request System was also included in the 2006 CBAs, which remain in effect until 2011.

The District Council made no attempt to notify the Government, either before or after it entered into the 2001 and 2006 CBAs, that these changes would occur. The Second Circuit held that this failure to give notice constituted contempt by the District Council of the Consent Decree: "[T]he Paragraph 12 requirement that "the District Council shall give prior written notice to the Government ... of any proposed changes to the By-Laws" was violated when the Union entered into CBAs that made it impossible to comply with the Job Referral Rules incorporated into both the Consent Decree and the Union By-Laws." 229 Fed.Appx. at 19.⁴ The Court of Appeals rejected "the Union's claim that Rule 5(B) permitted the job referral practices in the CBAs, and noted that the Union had offered no other argument that the terms of the CBAs were otherwise consistent with the Consent Decree's requirements," and concluded: "We remand for the entry of the Order of contempt, and leave to the district court's discretion the proper remedy." Id. Proceedings then took place before this Court on what that remedy should be.

B. Proceedings on the Question of Remedy

The Government and the District Council are original parties in the case. As noted, the District Council entered into the 2001 and 2006 CBAs with associations of contractors. The associations' membership is made up of contractor companies. The associations act as the collective bargaining representatives for their member contractors. Because the contempt remedy question had obvious implications for the 2006 CBAs, still in effect, and the contractors' interests in them, the Court allowed four associations to intervene in the remedy proceedings: the Building Contractors Association ("BCA"); the Wall-Ceiling & Carpentry Industries of New York, Inc. ("Wall-Ceiling"); the Cement League, Inc; ("Cement League"); and the General Contractors Association of New York, Inc. ("GCA") (sometimes collectively "the Intervenors").

In addition, the Court granted the status of amicus curiae to Eugene Clarke, a union member and prior litigant against the District Council and its chief executive officer,⁵ and allowed Clarke to make submissions on the remedy question.

The Government, the District Council, the Intervenors, and Clarke have filed affidavits and briefs on the question of remedy. The Court allowed the Government limited discovery into the Intervenors' assertions that abrogating the Request System would work great economic hardship upon contractors, and their assertions of ignorance concerning the Government's contempt motion challenging the validity of the Request System. Counsel for the Government, the District Council, three of the Intervenors (BCA, Wall-Ceiling, and Cement League), and Clarke presented oral arguments at a hearing on October 24, 2008. With the Court's permission, a number of individual carpenters made statements at the hearing, and certain of the Intervenors filed written submissions addressing those statements.

I will discuss in turn the several contentions with respect to the remedy that the Court should fashion.

II. THE CONTENTIONS OF THE GOVERNMENT, THE DISTRICT COUNCIL, THE INTERVENORS, AND CLARKE

A. The Government

The Government initially proposed, as a remedy, a new assignment scheme where half the carpenters on any job would come directly from the OWL in strict chronological order. The Government devised two mechanisms for accomplishing this outcome: either Job Referral Rule 5(B) be eliminated, or Rule 5(B) would be retained and the Job Referral Rules modified to provide that all an employer's requests (whether under Rule 5(B) or not) be counted against the employer's share of the 50/50 Rule calculation. Either remedy would do away with the limited benefit bestowed upon employers by Rule 5(B), where carpenters selected by an employer in accordance with its six-month requirement counted against the Union's 50 percent allocation.

However, as a second-best alternative, during the briefing and at the hearing the Government stated that it "would not oppose" the District Council's own second choice for a remedy, namely, a return to the status quo ante by abrogating the Request System and reinstating Job Referral Rule 5(B) as part of a reinvigorated 50/50 Rule.

Either way, under the Government's proposed remedy, the Court would also void the 2006 CBAs (which by their terms remain in effect until 2011), to the...