2014-08-25 usao to rmb re nee remand

U.S. Department of Justice

United States Attorney Southern District of New York

86 Chambers Street New York, New York 10007

August 25, 2014

By hand and ECF The Honorable Richard M. Berman United States District Judge United States Courthouse 500 Pearl Street New York, New York 10007 Re: United States v. District Council of Carpenters, 90 Civ. 5722 (RMB) Dear Judge Berman:

The government respectfully submits this letter in response to the order of the Court dated

July 25, 2014, directing the government to address certain aspects of Patrick Nee’s and Levy

Messinetti’s application for review of the Review Officer’s decision vetoing their holding of

office. Specifically, the Court sought the government’s views regarding whether the application

was still ripe for consideration, given the passage of time and intervening events, and whether

the Review Officer had authority under the June 2010 Stipulation and Order to take the veto

actions he did.

The government joins the Review Officer’s letter to the Court, which concludes that the

issues are moot, and that he had the authority to issue the veto. The government adopts the

Review Officer’s arguments, and offers the additional views set forth below.

A. Mootness

For the reasons stated in the Review Officer’s letter, there is no effective relief the Court

can now grant to Mr. Nee or Mr. Messinetti: the term of office from which they were vetoed has

been completed, so they cannot be restored to the remainder of that term. Nor is there any

Hon. Richard M. Berman page 2 August 25, 2014

prospective bar, as the Review Officer explains, to their running for or holding office. Walsh

Decl. ¶ 10. Moreover, if this Court were to sign the parties’ proposed stipulation submitted on

May 27, 2014, the matter would be moot for an additional reason: the Court-appointed officer

under that stipulation would no longer have the veto power at issue in this dispute. See United

States v. International Brotherhood of Teamsters, 964 F.2d 180, 183 (2d Cir. 1992) (intervening

election, upon which authority of court-appointed officer terminates, renders matters moot). For

that reason, and those stated in the Review Officer’s letter, there is no justiciable controversy at

this time, and the applications should be dismissed as moot.

B. The Review Officer’s Authority

The Review Officer is also correct that he had the authority to remove Mr. Nee and Mr.

Messinetti by exercise of his veto authority. The government agrees with the Review Officer’s

assessment of the stipulation’s text and context. The government further agrees that the

motivation for the 2010 stipulation arose from the corrupt and unlawful actions of numerous

union officials and the need to rid the union of those persons who would continue that larcenous

tradition. Moreover, the government concurs that the parties’ course of dealings under the

stipulation—in which neither party to the stipulation, the union and the government, has ever

voiced an objection to the Review Officer’s multiple vetoes of those already holding office,

including elected officials—demonstrates the parties’ understanding that the Review Officer has

the power to remove officeholders. See United States v. Broadcast Music, Inc. (“BMI”), 275 F.3d

168, 175 (2d Cir. 2001) (“prior course of performance” and “prior course of dealing” may be

examined to resolve ambiguity in consent decree).

The government also notes that the negotiations between the parties leading up to the

submission of the 2010 stipulation cast light on its meaning. See BMI, 275 F.3d at 175;


Canterbury Belts Ltd. v. Lane Walker Rudkin, Ltd., 869 F.2d 34, 38 (2d Cir. 1989) (“‘evidence

surrounding [consent decree’s] negotiation and tending to explain ambiguous terms would be

admissible in evidence’” (quoting United States v. ITT Continental Baking Co., 420 U.S. 223,

238 n.11 (1975)).

The government’s first draft of a proposed stipulation was sent to the union’s counsel on

January 6, 2010. (The draft is attached to the accompanying declaration as Exhibit A.)

Paragraph 5.b of that draft sets forth the “Monitor’s” oversight authority. Paragraph 5.b.iii gave

the Monitor authority to “review[] all proposed appointments to District Council office or

employment”—including appointments to the Benefit Funds (as was made clear in the

definitional paragraph 1.b)—and to “veto any proposed appointment” if it met certain criteria

(essentially the same criteria set forth in the stipulation entered by the Court). Paragraph 5.b.iv

gave the Monitor authority “to review the persons currently holding office or employment within

the District Council,” including the Funds, “and dismiss any person whose continued

officeholding or employment” meets those same criteria. Paragraph 5.f set forth the Monitor’s

separate authority over the union’s disciplinary process. Thus, in this first proposal, the authority

to dismiss a person already holding office was clear, despite the separate power over disciplinary

proceedings. The District Council did not object to this approach.

However, in negotiations, the government, the proposed Monitor, the union, and the

Benefit Funds agreed that the Monitor’s authority over the Funds should be different. Thus, the

Funds were removed from paragraph 1.b’s definition, and the Monitor’s oversight powers were

distinguished: the power to veto was granted with respect to the District Council, but regarding

the Funds, the Monitor’s power was limited to providing the Funds with notice of the violation.

(See Exhibit B, draft transmitted to the union on February 22, 2010.) To avoid repeating this


lengthy separation of authorities, as well as the criteria the Monitor was to apply, in each of the

provisions of paragraph 5.b, the Monitor’s power to act following his review was consolidated

into paragraph 5.b.vi, which provided for the Monitor’s power to “veto or require the District

Council to rescind its action, proposed action, or lack of action.” This power applied to all the

prior provisions under which the Monitor could “review” certain topics, including both

“proposed appointments to office” (5.b.iii) and “persons currently holding office” (5.b.iv).

Although the paragraphs were later renumbered and combined into 5.b.i.3 in the final stipulation

entered by the Court—an amendment that further streamlined the stipulation and clarified the

distinction of authorities applicable to the union and the Funds—the final provisions are

substantially the same as in the February version.

These alterations—changing the authority to “dismiss” a person holding office to the

authority to “veto or require the [union] to rescind its action, proposed action, or lack of action”

after reviewing officeholders—did not affect the now-renamed Review Officer’s power

regarding the District Council. Torrance Decl. ¶ 5. As explained above, the changes were made

in order to implement a negotiated agreement that the Review Officer’s powers would be

lessened regarding the Benefit Funds as compared to the District Council; further changes in

wording were made to avoid cumbersome repetition of this bifurcated scheme. Id. Although

these amendments introduced the ambiguity identified by the court of appeals in its recent

summary order, they did not change what was clear from the beginning of the negotiations, and

never contested by the union before or after the stipulation was signed: the Review Officer has

the power under paragraph 5.b to dismiss current officeholders. Id. Indeed, if the Review Officer

lacked that power, his uncontested authority to “review” current officeholders would be

meaningless, for upon finding that any such officeholder was violating the law or otherwise


committing misconduct, he would have no power to do anything about it. That would be entirely

nonsensical in the context of a stipulation, entered in a RICO case brought to purge the union of

entrenched corrupt and criminal influences, proposed and negotiated on the heels of the

indictment (later resulting in convictions) on racketeering charges of numerous high-level union

officials.

Counsel for the government has reviewed the correspondence among the government, the

Funds, the union, and Dennis Walsh (as the Monitor/Review Officer-designate) regarding these

negotiations, and has found nothing to contradict the account detailed above. Torrance Decl. ¶ 5.

The only items relating to these changes are consistent with this recitation of facts: an exchange

of emails in which Mr. Walsh noted concerns that may be raised by the Funds, that a veto

authority applied to them could interfere with their fiduciary and statutory duties. Id. ¶ 6. Those

concerns led to the changes described above, ultimately accepted by the Funds and the union.

But at no point did the parties propose, or even discuss, any lessening of the power initially

proposed by the government without objection from the union: that the Review Officer would

have the authority to dismiss current officeholders. Id. ¶ 5. The course of negotiations leading up

to the June 2010 stipulation therefore strongly suggests that the Court was correct in its prior

rulings: the Review Officer has the authority to dismiss officeholders under paragraph 5.b.


Thank you for your consideration.

Respectfully,

PREET BHARARA United States Attorney

By: /s/ Benjamin H. Torrance

BENJAMIN H. TORRANCE TARA M. La MORTE Assistant United States Attorneys Telephone: 212.637.2703, .2746 Fax: 212.637.2702 E-mail: [email protected]

[email protected] cc: Dennis Walsh Bridget Rohde Barbara Jones Patrick Nee Levy Messinetti

2014-08-25 usao to rmb re nee remand

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