6-14-13 bridget rhode memorandum of law to judge berman doc 1333

7/28/2019 6-14-13 Bridget Rhode MEMORANDUM of LAW to Judge Berman Doc 1333

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UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK XUNITED STATES OF AMERICA,Plaintiff,

90 Civ. 5722 (RM B)

-against-

DISTRICT COUNCIL OF NEW YORK CITYAND V ICINITY OF THE UNITEDBROTHERHOOD OF CARPENTERS ANDJOINERS O F AM ERICA, et al. ,

Defendants.MEMO RANDUM OF LAW IN RESPONSE TO THEPETITION OF MICHAEL BILELLOBridget M. RohdeMintz Levin666 Third AvenueNew Y ork, New Y ork 10017For the Review Officer,Dennis M. Walsh

Case 1:90-cv-05722-RMB-THK Document 1333 Filed 06/14/13 Page 1 of 25


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PRELIMINARY STATEMENTOn April 29, 2013, the Review Officer vetoed the position of Michael Bilello as

Executive Secretary-Treasurer of the New York City District Council of Carpenters ("DistrictCouncil"), based on five findings supported by the Declaration of his Chief Investigator JackMitchell; the Mitchell Declaration detailed evidence including interviews and documents andwas further supported by exhibits, including the declarations of others. This memorandum issubmitted in response to Mr. Bilello's petition challenging the veto.

The veto should be upheld. The veto was a proper exercise of the RO's authority underParagraph 5.b.iii of the Stipulation and Order entered in United States v. District Council of NewYork City and Vicinity of the United Brotherhood of Carpenters and Joiners of America, et al.,90 Civ. 5722 (RMB), on June 3, 2010. It should be affirmed under the applicable standard ofreview as the RO's findings are plainly reasonable and supported by substantial evidence in therecord as a whole and consistent with the law, as discussed below. See United States v. DistrictCouncil, et al. (Nee), 2012 WL 5236577, at *5 (S.D.N.Y. Oct. 23, 2012); see also United States

v. District Council, et al. (Passero), Decision and Order at 4 (S.D.N.Y. June 5, 2013).THE STIPULATION AND ORDER

A.elevant Powers Pursuant to the Stipulation and OrderBy paragraph 3 of the Stipulation and Order, Dennis M. Walsh, Esq., was appointedReview Officer of the New York City District Council of Carpenters and its Benefit Funds.Following recent events in the District Council's long troubled history, as agreed to by theGovernment, the District Council and the Benefit Funds and acknowledged by the Court, "thepresence and activity of an independent court-appointed officer granted powers" beyond thoseprovided in previous orders in this matter is "essential to the eradication of corruption andracketeering as they affect union carpenters and union employers." Stipulation and Order at p. 3.



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Among the powers afforded to the RO are Review and Oversight Authority, including theauthority "to review the persons currently holding office or employment." Id. at 5.b.i(3).Upon such review, the RO may determine, inter alia, that a matter violates a law or Court orderin this case, id. at 5.b.iii(c); is contrary to a fiduciary responsibility imposed by 29 U.S.C. 501or 29 U.S.C. 1001 et seq. (ERISA), id. at 5.b.iii(d); or is inconsistent with the objectives ofthe Stipulation and Order, id. at 5.b.iii(e). If the RO makes such a determination, he may vetoa person's position. See id. at 5.b.iii.

B.O' s Procedures for Action Pursuant to Paragraph 5.b of the Stipulation andOrder

The Stipulation and Order does not provide any procedures that the RO is required toemploy in exercising his Review and Oversight Authority; it states that the RO may prescribeprocedures. See id. at 5.b. On June 21, 2010, the RO promulgated the procedures that hewould follow "when determining whether to take certain action pursuant to 5.b.iii of theStipulation and Order," including in the veto context. As the RO noted in the PreliminaryStatement of his Procedures memorandum, the procedures were not required by the Stipulationand Order but were being established to facilitate an efficient means for the RO to make orsupplement a record and allow one to make a written submission to the RO. Se e First InterimReport of the Review Officer, Exhibit 14.

As set forth in the Procedures promulgated by the RO, if he is contemplating a veto under5.b.iii, he will send a written Notice of Possible Action to affected parties no later than 10 days

prior to issuing the veto. The RO provided that his Notice of Possible Action would include a"concise statement of the matter under consideration," reference to which of the conditions in 5.b.iii(a)-(e) might apply, and an invitation for the parties given notice to make a writtensubmission by a specified time stating facts, law or arguments a party believes relevant. The

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Procedures also prov ide that the RO, at his discretion, may invite the parties to appear at a Pre-Action Conference. Once the time for a written submission and/or conference has passed, theRO will take action pursuan t to 5.b.iii or not and, if he is taking action, send a written decisionto the relevant parties. See id.

As is the RO's practice, the Procedures w ere enclosed w ith the Notice of Possible Actionissued to Mr. Bilello on March 26, 2013 an d discussed infra.

THE STANDARD OF REVIEW GOVERNING THE COURTWITH RESPECT TO THE RO'sETOESThe Stipulation and Order provides that the RO's actions with respect to 5.b, whichunquestionably includes the powe r to remove elected officials,' "may be reviewed by the Co urtupon a petition for review by the District Council, the Government, or any aggrieved person."Stipulation and Order at 11 . The Stipulation and O rder further provides that "in reviewing theReview Officer's decision the Court will apply the same standa rd of review applicable to reviewof final agency action under the Adm inistrative Procedure Act, 5 U.S.C. 701 et seq." Id .

As this Co urt has stated, the RO's findings of fact " 'are entitled to affirmance on reviewif they are reasonable and supported by substantial evidence in the record as a whole' and maybe 'set aside only if they are unsupported by substantial evidence.' " Nee, 2012 WL 5236 577, at*5 (quoting United S tates v. District Council, et al. (Fiorino), 941 F. Supp. 349, 362 (S.D.N.Y.1996)); see also Passero, Decision and Order at 4. " 'Substantial evidence is more than a merescintilla but something less than the weight of the evidence, and the substantial evidence

standard may be met despite the possibility of drawing two inconsistent conclusions from theevidence.' " Nee, 2012 WL 5236577, at *6; Passero, Decision and Order at 4. " 'The Courtmust consider the reasonableness of [the RO's] action based on the record in existence at the

Itee Nee, 2012 WL 5236577, at *7; Passero, Decision and Order at 3.3



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time of the decision; it will not engage in an evidentiary hearing or a de novo review.' "Passero,Decision and Order at 4 (quoting Boatmen v. Gutierrez, 429 F. Supp. 2d 543, 548 (E.D.N.Y.2006)). " 'In considering a relevant question of law . . . the reviewing court asks whether theagency's action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordancewith law.' " Nee, 2012 WL 5236577, at *5 (quoting Fiorino, 941 F. Supp. at 362); Passero,Decision and Order at 4.

In short, the "RO has broad authority to investigate allegations of wrongdoing byofficers, members and trustees and to review and veto persons currently holding office oremployment," Passero, Decision and Order at 14 (citations omitted), and great deference is to beafforded the RO's decisions, Nee, 2012 WL 5236577, at *6 (citing United States v.hd. ofTeamsters, 970 F.2d 1132, 1137 (2d Cir. 1992)).PROCEDURAL HISTORY AND FACTSOn March 26, 2013, the RO issued a Notice of Possible Action to Mr. Bilello, indicatingthat he was "considering issuing a veto of [his] service as Executive Secretary-Treasurer of theNew York District Council of Carpenters." See Notice of Possible Action, attached as Exhibit Ato Exhibit 1 of Goldman Declaration.2 /

Consistent with his Procedures, the RO set forth the following eight violations ofParagraphs 5.b.iii (c, d and e) and 7 of the Stipulation and Order:

(a) from on or about July 1, 2012, through March 12, 2013, [Mr. Bilello] failed toabide by Section 21 of the District Council Bylaws and caused or attempted tocause employer compensation for members to be directed to the New York CityDistrict Council of Carpenters Welfare Fund;(b) on March 22, 2013, [Mr. Bilello] directed a business representative of theDistrict Council attempting to properly enforce the collective bargaining

2/y the "Goldman Declaration," we are referring to the Declaration of Daniel Goldman in Support ofMichael Bilello's Petition to Vacate the Veto of the Review Officer, together with its exhibits, which includes theveto materials relevant to M r. Bilello.

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agreement at the Javits Center to let a suspended m ember w ork at the Javits Centerknow ing that the person had been suspended as a mem ber;(c) on M arch 13, 2013, [M r. Bilello] refused to answer questions about [his] reportto the Delegates properly posed to [him] by a delegate at a m eeting of the DelegateBody of the D istrict Counc il;(d) on July 25, 2012, [Mr. Bilello] engaged in indecorous and undemocraticbehavior in a debate with a delegate at a meeting of the District Council DelegateBody;(e) from on or about September 2012, to the present, [Mr. Bilello] failed tocontinue the development of the business representative cross-training programrecommended by the Review Officer and begun by the former District CouncilPresident and A ssistant to the EST;(f) from on or about August 22, 2012, through October 2012, [Mr. Bilello] failedto take reasonable and prudent measures to implement the terms of theMemorandum of Agreement between the District Council and the Association ofWa ll-Ceiling and Carpentry Industries of New Y ork, Inc.;(g) from on or abou t January 11, 2012, to the present, [Mr. B ilello] failed to reviewminutes of the meetings of the Board of Trustees of the Benefit Funds with theDistrict Council Executive Comm ittee;(h) on March 22, 2013, [Mr. Bilello] failed to cooperate with an investigation ofthe Review O fficer by falsely stating, in sum and su bstance, that a certain businessrepresentative "suggested to me that I give [a suspend ed mem ber] to the end of theweek [working at Javits Center], like w e are doing for others."

Id . Additionally, the RO invited Mr. Bilello to make a written submission by noon on April 9,2013 and that a pre-action conference ("PA C") wou ld be scheduled for a later date. See id.

Mr. Bilello did not make a written submission to the RO. He did, how ever, avail himselfof the opportunity for a PAC, which he attended with his counsel Guy Petrillo, Esq., and DanGoldman, Esq., on April 26, 2013. At the PAC, Mr. Bilello's position was presented to the ROand Mr. Mitchell; the RO posed questions and ultimately asked that Mr. Bilello submit adeclaration. Later that day, the RO and M r. Mitchell met again with M r. Bilello's counsel. ThenMr. Bilello submitted an Affirmation memorializing his position involving the events at the

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Javits Center on March 22. See Bilello Affirmation 4/26/13, attached to the MitchellDeclaration.

On A pril 29, 2013, the RO issued a Notice of V eto of Mr. Bilello's service as EST of theDistrict Council. See Notice of Veto, attached as Exhibit 1 to the Goldman D eclaration. The ROexercised his judgment to issue a veto having considered the D eclaration of Jack M itchell datedApril 29, the Affirmation of Michael Bilello dated April 26, and the statements and argumentsmade by Mr. Bilello and his counsel at the PAC , and having observed M r. Bilello's conduct andundertakings from the beginning of his service as EST in January 2012. See id., including theexhibits attached thereto. The RO based his veto on five of the eight grounds set forth above,choosing not to rely upon (c), (d) and (f) above.

In his Declaration, Mr. Mitchell summarizes pertinent facts supporting each of the fivegrounds forming the basis of the RO's veto of Mr. Bilello's service as EST, includinginformation from interviewing w itnesses, reviewing docum ents, attending the above-referencedPAC and reviewing Mr. Bilello's Affirmation. Each ground for the veto, and a summary of thefacts supporting it, is set forth below.Notice of Veto, ground (1), i.e., that between July 1, 2012 and March 12, 2013, Mr. Bilello"failed to abide by Section 21 of the District Council Bylaws and caused or attempted to causeemployer compensation for members to be directed to the New York City District Council ofCarpenters Welfare Fund."

Investigator Mitchell set forth the fact of the rate increase of $2.60 an hour achieved inthe new Hoisting and Scaffolding Trade Association, Inc. Collective Bargaining Agreement

("HASTA CBA"); the Rate Increase Allocation document signed on June 28, 2012 by Mr.Bilello directing $2.59 of the $2.60 an h our to the W elfare Fund; information from Phil Guidiceof the Benefit Funds that he uses the R ate Increase Allocation document to create an hourly wageand ben efit schedule, which is supplied to contractors and which is used to enter the rates into the

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Funds' computer system so that the proper allocations are made by the Funds; information fromFunds' staff that contractors working under the HASTA CBA have been paying the increasedrate for the Welfare Fund; and the language from Section 21 of the District Council Bylawsplainly stating that all allocations from negotiated total wage a mou nts including to the W elfareFund "shall be determined by the Council Delegate Body." See Mitchell Declaration at 1-2,attached to Exhibit 1 of Goldma n Declaration.Notice of Veto, ground (2), i.e., that on March 22 , 2013, Mr. Bilello directed a union businessrepresentative, who was trying to enforce the Javits Center CBA properly by not allowing asuspended carpenter to work at Javits, to allow the member to w ork.

Investigator Mitchell supplied a narrative supported by, inter cilia, an email written by abusiness representative assigned to the Javits Center, Andrew Mucaria, shortly following theincident on March 22; interviews conducted that same day or shortly thereafter by the RO'sinvestigative staff of a number of individuals with knowledge including Mr. Bilello, BusinessRepresentative Mucaria and others; and declarations memorializing salient points from some o fthe aforementioned interviews. Se e Mitchell Declaration at 2-3, attached to Exhibit 1 ofGoldman Declaration.

In summary form, on the morning of March 22, Business Representative ("BR") Mu cariawas assigned to the Javits Center to assist with signing in union members to work. Two shopstewards directed a suspended member to him, he called the suspended member's local unionand the local advised that the member in question was suspended for not having paid dues sinceMarch 2012. A standing policy regarding members who can work at the Javits Center takes agradated approach to members who are behind paying their dues, but once a member is behindmore than three m onths in dues, he cannot work at the Javits Center until all back dues are paidand he has a current work card. See Mitchell Declaration at 2, n.1 (setting forth policy). BR

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Mucaria thus told the suspended member he could not work at the Javits Center. The suspendedmember walked away, but returned shortly thereafter and handed his phone to BR Mucaria,saying that Mr. Bilello wanted to talk to him. (Both Mr. Bilello and the suspended memberadvised that they had previously worked on a job together and that the suspended member hadreached out to Bilello that morning regarding the Javits Center situation). Se e MitchellDeclaration at 3.

As BR Mucaria stated in his declaration, "Bilello told me that [the suspended member]should be allowed to work because he has been out of work for a year. Bilello stated that [the

suspended member] is in the process of taking out a loan...from his Council annuity and [he]will pay his dues on Monday [the 22" was a Friday]. I told Bilello that [the suspended member]hadn't paid his dues since at least March 2012. Bilello directed me to allow [the suspendedmember] to work. I never told or suggested to Bilello that [the suspended member] be allowedto work without paying his dues in full." Mitchell Declaration, Exhibit H at 3 (emphasisadded). BR Mucaria further stated that when he returned to the District Council later that samemorning, he advised his supervisors Paul Capurso and Joseph DiNapoli "that Bilello directed[him] to allow [the suspended member] to work without a current work card. Capurso andDiNapoli told me to send them an email stating what happened." Mitchell Declaration, ExhibitH at 5. In an email that same day at 10:29 a.m., BR Mucaria sent an email to Messrs. Capursoand DiNapoli as well as Director of Operations, Matt Walker, listing members scheduled to workat the Javits Center that day who were suspended relative to their status on Working DuesAssessment or regular dues and highlighting those members who were still delinquent. Next tothe name of the suspended member at issue here, BR Mucaria wrote "has not paid since 3-31-12cleared for work by EST." BR Mucaria concluded his declaration recounting a meeting the

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currently had responsibility, Mr. Bilello never responded. Id. As summarized in the SixthInterim Report of the Review Officer at 19, "[t]he former EST demonstrated no actual interest inthe training program and no interest in rotating business representatives."Notice of Veto, ground (4), i.e., that from on or about January 11, 2012, to the present, Mr.Bilello failed to review minutes of the meetings of the Board of Trustees of the Benefit Fundswith the District Council Executive Committee, in contravention of Section 10(L) of the Bylawsof the District Council.

Investigator Mitchell reported that having "reviewed all minutes of District CouncilExecutive Committee meetings from January 11, 2012 through March 26, 2013 [...] at no timedid Bilello discuss the minutes of meetings of the Board of Trustees of the Benefit Funds withthe Executive Committee." Mitchell Declaration at 4.Notice of Veto, ground (5), i.e., that on March 22, 2013, [Mr. Bilello] failed to cooperate withthe investigation of the Review Officer by falsely stating, in sum and substance, that a certainbusiness representative "suggested to me that I give [a suspended member] to the end of theweek [working at Javits Center], like we are doing for others."

Among the interviews conducted following the reporting of Mr. Bilello's action at theJavits Center to the District Council hierarchy and to the RO was an interview of Mr. Bilellohimself. Investigator Mitchell together with Investigator Bill O'Flaherty and the RO(participating by telephone), interviewed Mr. Bilello the afternoon of the incident, which issummarized succinctly in the Mitchell Declaration:

During the interview Bilello stated that Mucaria suggested that Mucaria could let[the suspended member] work like he let the others at the Javits [Center]. SeeExhibit F at 1. Our investigation regarding this matter indicates that this is nottrue. First, Mucaria flatly denies he said anything like what Bilello said. In fact,Mucaria told Bilello that [the suspended member] hadn't paid his dues sinceMarch 2012 and Bilello told Mucaria to allow [the suspended member] to workanyway. See Exhibit H at 1. Second, as described in the Mucaria email there wereno other members to be "like." No one was allowed to work without paying eithertheir union dues or working dues assessments ("WDA"). Three others were toldthat they must pay their working dues assessments before they were allowed towork and ten members were allowed to work because they paid their WDA, all asper the District Council policy. See Exhibit E. Third, in his email Mucaria sent to

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Capurso, DiN apoli and W alker a mere hours after the incident, Mucaria stated that[the suspended member] was "cleared for work by the EST." See Exhibit E.Finally, no one we spoke to other than Bilello stated that Mucaria told themMucaria made any statements that he suggested to Bilello that he allow [thesuspended m ember] to work like we are doing for the others.Mitchell Declaration at 4-5 (emphasis in original).

Additionally of importance given Mr. Bilello' s argument is further detail included inInvestigator O'Flaherty's memorand um attached as E xhibit F to the Mitchell Declaration;

Bilello said Mucaria suggested giving [the suspended member] until the end ofnext week to pay his dues, just like they were doing for three other guys and thatBilello agreed with Mucaria to allow [the suspended member] to work. Bilellosaid that this was nothing different than someone owing their Working DuesAssessment.RO Walsh asked Bilello if what he was saying was Mucaria had suggested [thesuspended mem ber] be allowed to work w hile suspended. Bilello answered no, hewas not.

Mitchell Declaration, Exhibit F at 1.Based on the above, the RO issued the Notice of Veto with respect to Mr. Bilello's

position as EST, finding reasonable cause to believe that each of the five above-specifiedviolations had been c ommitted.

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ARGUMENTThe Veto Was Neither Arbitrary Nor Capricious

Mr. Bilello's assertion that the RO's veto was "an overreaching, capricious andunreasonable determination, unsupported by governing authority and indisputable facts," seeBilello Br. at 1, 1 is plainly at odds with the factual record in this matter and misapprehends theapplicable standard of review.

As a general matter, and as previously recognized in this case and others, the "RO hasbroad authority to investigate allegations of wrongdoing by officers, members and trustees and toreview and veto persons currently holding office or employment," Passero, Decision and Orderat 14 (citations omitted), and great deference is to be afforded the RO's decisions, Nee, 2012 WL5236577, at *6 (citing United States v. Int'l Bhd. of Teamsters, 970 F.2d at 1137). Indeed, it wasprecisely with respect to these types of supervisory positions that set a tone for the Union as awhole that the parties intended the RO to have this type of review capability. The Stipulationand Order specifically provides the veto grounds cited by the RO with respect to Mr. Bilello, i.e.,

conduct that is contrary to any law or court order entered in this case, to any fiduciary dutyimposed by 29 U.S.C. 501 or ERISA, or inconsistent with the objectives of the Stipulation andOrder. See Stipulation and Order atand e). The issuance of a Notice of Veto withrespect to Mr. Bilello was thus squarely within the purpose of the Stipulation and Order and thescope of the RO's authority thereunder. That Mr. Bilello's conduct was not of a nature that heapparently views as more egregious, e.g., being accused of a crime or associating with barredindividuals, is irrelevant. Se e Bilello Br. at 3.

3/Bilello Br." refers to the Memo randum of Law of Michael Bilello in Support of his Petition to Vacate theVeto of the Review Officer.12



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As demonstrated by the evidence in the Mitchell Declaration and supporting exhibits, itwas clearly within the RO's discretion to find reasonable cause to believe that Mr. Bilellocommitted the various transgressions outlined above. The RO reviewed the Mitchell Declarationsummarizing what the investigation revealed as well as the many exhibits, including additionaldeclarations by persons with knowledge and documentary evidence supporting the MitchellDeclaration. Moreover, the RO was directly involved in many aspects of the investigation,including the March 22 interview of Mr. Bilello.

We discuss each ground for the veto below, grouping them in a way that we hope

facilitates review.Grounds 2 and 5 (Javits Center-related violations)

With respect to ground 2, involving Mr. Bilello improperly directing a businessrepresentative at the Javits Center to put a suspended member to work, there is a voluminousrecord supporting the RO's determination. This record unquestionably presents sufficientevidence under the applicable standard. See pages 7-9 supra and Mitchell Declaration and theexhibits thereto. As noted, Investigator Mitchell and others on the team started conductinginterviews immediately upon being alerted to the incident at the Javits Center. This includedinterviewing and obtaining declarations or memorializing statements of BR Mucaria and othersin the Union regarding what had happened. See Mitchell Declaration, e.g., Exhibit H (MucariaDeclaration) and Exhibit I (Capurso Declaration). Mr. Mucaria's account was corroborated byhis email to his supervisors reflecting, inter alia, that three members had been instructed thatthey could not work until they paid their dues and that the suspended member at issue here hadnot paid his dues since March 2012 but had been cleared to work by the EST, i.e., Mr. Bilello.See Mitchell Declaration, Exhibit H and attachment thereto. The swift actions taken by BR

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Mucaria and others show their concern that the EST was improperly directing that a suspendedmember be put to work, thus further evidencing Mr. Bilello's improper conduct.

Mr. Bilello attempts to counter this overwhelming evidence in a number of ways.Factually, in his statement regarding March 22, Mr. Bilello shifted the responsibility for puttingthe suspended member to work to BR Mucaria, saying words to the effect that BR Mucaria askedwhether Mr. Bilello wanted to let the suspended member " 'go to the end of the week like theothers.' " Mitchell Declaration, Bilello Affirmation 4/26/13 at 5. (The Bilello Brief has as anexhibit an affirmation by Mr. Bilello dated May 23, 2013. Under the governing APA standard ofreview, a court does not engage in fact finding and substitute its resolution of the facts for that ofthe agency, here the RO. See Passer() Decision and Order at 4 (citing Boatmen v. Guitterez, 42 9F. Supp. 2d at 548)). Notably, there is no other support for Mr. Bilello's assertion beyond hisown account, which is not even entirely consistent with his statements to the RO and his teamearlier on March 22 before he provided the written statement. See Mitchell Declaration, ExhibitH at 1. When the RO pointedly asked Mr. Bilello if he was saying that Mr. Mucaria "suggested[the suspended member] be allowed to work while suspended[,] Bilello answered no, he wasnot." Mitchell Declaration, Exhibit F at 1.

What Mr. Bilello did was a classic example of what is not permitted: regardless ofwhether there is organized crime involvement, power within the Union cannot be utilized tobestow the favor of permitting someone to work when he is not entitled to. See, e.g., Fiorino,941 F. Supp. at 376-381 (upholding a decision earlier in this case where a panel convened underthe Consent Decree decided that Fiorino, inter alia, improperly allowed individuals to work atthe Javits Center while they were not members in good standing of the Union).

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Finally in this regard, the applicable standard provides that "the substantial evidencestandard may be met despite the possibility of drawing two inconsistent conclusions from theevidence." Passero at 4 and other cases cited supra.

Faced with the fact that there was clearly substantial evidence to support the RO'sdecision, Mr. Bilello now argues that the premise that the business representative was actingproperly, and that Mr. Bilello thus directed him to do something improper, is legally incorrect.See Bilello Br. at 2. This is unsupportable. The Collective Bargaining Agreement ("CBA")applicable to the Javits Center, referenced in the Mitchell Declaration at 2 n.2 and Exhibit D

thereto, and the policy for the Javits Center, set forth in the Mitchell Declaration at 2 n.1, providethe ground rules for permitting an individual to work at the Javits Center. (A January 18, 2013letter to a supervisor at the Javits Center and signed by Michael Cavanaugh as Vice-President/Assistant to the EST reflects the policy that members maintain their good standing inthe Union in order to be permitted to work. See Sixth Interim Report, Exhibit 14). Thesuspended member fell into the third and last category under the policy, i.e., "if a member isbehind payment of local union dues more tha[n] three months, and thus suspended, the membercannot work at the Javits Center until all back dues are paid and the member has a current workcard." See id. The suspended member at issue was not even a close call, being a year behind inhis dues. Plainly, everyone from BR Mucaria up knew that Mr. Bilello was violating the rules bydirecting that the suspended worker be permitted to work and they acted accordingly.

Mr. Bilello weaves a byzantine argument in an effort to try to paint the quick, ethicalaction by BR Mucaria and others as improper. See Bilello Br. at 20-26. Again, Fiorino isinstructive. As mentioned, the Court affirmed the finding of a panel considering certain chargesby a court-appointed officer then referred to as the IRO, including that Fiorino, who was a

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business representative, had improperly allowed individuals to work at the Javits Center whilethey were not members in good standing of the Union. 941 F. Supp. at 381. In the course of itsopinion, the Court discussed wha t does and wha t does not constitute an unfair labor practice. Idat 378-79. The Co urt stated:

As a general m atter, federal labor law prohibits a union from causing an em ployerto discriminate against an employee in order to induce the employee to join theunion or behave like a "good" union member...Moreover, an individual who hasbeen denied or terminated from membership cannot be the subject of union-induced discrimination by the employer, unless his poor standing in the unionderives from a failure to pay dues... These precepts are cod ified in section 8(b)(2)of the NLR A, 29 U.S.C. 158(b)(2)...Id . (emphasis add ed; internal citations omitted).

There is no basis whatsoever for finding that the RO acted unreasonably in finding thatMr. B ilello improperly directed a business representative to allow a suspended mem ber to workwhen the business representative was trying to properly enforce the CBA by not allowing themember to w ork. Indeed, if the RO had not so found, Union m embers might well have thoughtthe RO was derelict in his duties. The evidence clearly supports the RO's decision, as does thelaw.

Related to ground 2 is ground 5, i.e., that Mr. Bilello did not act cooperatively whenquestioned by the R O an d his team reg arding the incident at the Javits Center. This specificallyderives from Mr. Bilello making a false statement to the RO in essentially stating that BRMucaria had raised putting the suspended member to work and he (Bilello) agreed. As notedabove, this is in direct contradiction to the statement by BR M ucaria that "Bilello directed me toallow [the suspended m ember] to wo rk. I never told or suggested to Bilello that [the suspendedmemb er] be allowed to work w ithout paying his dues in full." Mitchell Declaration, Exhibit H at 3. It is also at odds w ith the swift action taken by B R M ucaria, i.e., reporting and d ocumenting

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the incident, and by Union supervisors, immed iately addressing the issue raised to them by B RMucaria, including by reporting it to the RO. Moreover, as noted, Mr. Bilello's variousstatements are not even entirely consistent on this point.

Mr. Bilello now claims that there is no contradiction between him and BR Mucaria "letalone anything that reasonably may be interpreted as a false statement by Mr. Bilello." BilelloBr, at 29. Bilello states that he never disputed that he told BR Mucaria to put the suspendedmember to work. Id . This is at odds with the words spoken and the way they were un derstoodby everyone else involved , as demonstrated by the record. In an y event, the applicable standardprovides that "the substantial evidence standard may be met despite the possibility of drawingtwo inconsistent conclusions from the evidence." Passero at 4 and other cases cited supra.

As to Mr. Bilello's assertion that "[a]n alleged false statement that is claimed to haveconstituted a failure to cooperate in an "investigation" must have some investigative significanceto the issue(s) under investigation" and that his had no such investigative significance, seeBilello Br. at 30, we point out quite simply that neither the EST nor any o ther Union official ormember can lie to the RO and be viewed as acting consistent with the objectives of theStipulation and Order, see 5.b.iii(e), or as having been cooperative under paragraph 7 of theStipulation and Order. It wou ld fatally undermine the Con sent Decree and S tipulation and O rderif that were permissible.

If Mr. Bilello is trying to superimpose the e lements of 18 U .S.C. 1001 (the federal falsestatements statute), and the materiality element in particular, his efforts are misplaced becausethe question is whether the RO had sufficient evidence and reasonable cause to believe thatconduct had been committed that is, for example, inconsistent with the objectives of theStipulation and Order. Se e Stipulation and Order at 5.b. Additionally, if the context were a

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criminal violation of Section 1001, Mr. Bilello's false statement would be directly material to thematter being investigated.

Once again, under the applicable standard of review, this veto ground must stand.Grounds 1 and 4 (Bylaws violations)

Mr. Bilello claims that the RO's veto based on his failure to adhere to Sections 21 and 10of the District Counsel's Bylaws is unreasonable. See Bilello Br. at 7-13. Mr. Bilello concedesthat he did not follow Section 21 when he allocated most of the HASTA wage package increaseto the Welfare Fund without receiving approval for the allocation from the Delegate Body,

classifying it as a good faith procedural governance error, see Bilello Br. at 1, trying to shiftblame to the RO as well as the District Council IG, CCO and outside legal counsel for not tellinghim that he was not following the Bylaws, and essentially stating his action was well intentioned.See Bilello Br. at 7-10. Mr. Bilello also states that the Stipulation and Order does not empowerthe RO to address this kind of error, which he views as being, in any event, minor. See BilelloBr. at 1 and 11. Each of these complaints takes us far afield from the applicable standard underthe APA.

First, there is substantial evidence that Mr. Bilello failed to follow Section 21 of theBylaws and get advance approval from the Delegate Body for making the allocation to theWelfare Fund. The Mitchell Declaration, at 1-2, recounts the basic facts regarding the wage andbenefits increase, e.g., Mr. Bilello signing the document allocating most of the increase to theWelfare Fund and the information showing that the allocation was implemented by the BenefitFunds, Section 21 of the Bylaws could not be clearer that Delegate Body approval of such anallocation was required. See Mitchell Declaration at 1-2 (quoting Bylaw). Moreover, Mr.

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Bilello conceded that he did not follow the Bylaw. See, e.g., Bilello Br. at 1, 8. Withoutquestion, Mr. Bilello failed to follow Section 21 of the Bylaws.

Mr. Bilello's attempt to minimize the importance of following the Bylaws, referring tothem as "new" and noting more informal past practices with determining rate increaseallocations, see Bilello Br. at 8, provides no justification for his actions. As the Court is aware,the current District Council Bylaws were finalized and enacted on August 5, 2011, following acomprehensive review and revision process, as part of the reform efforts. Allowing Bylaws to bedisregarded, especially based on past practices, would undermine the reform efforts beingundertaken pursuant to the Consent Decree and Stipulation and Order.

Notably, Mr. Bilello's failure to follow Section 21 could have had serious repercussions.Almost $1 million in allocations had to be retroactively approved by the Delegate Body to besent to the Welfare Fund and, if the vote had been to reject Mr. Bilello's action, there was noobligation on the Benefit Funds' part to return the money.

The only remaining question is whether the RO's decision was arbitrary and capriciousand, plainly, it was not. Mr. Bilello's conduct unquestionably constituted a ground for a vetounder 5.b.iii, at the very least because it was inconsistent with the objectives of the Stipulationand Order. No matter how commendable a Union official believes his intended action to be, heis required to follow the Bylaws. He could not bypass the Delegate Body here. That is thesystem put in place to ensure transparency and accountability, both of which are mandatoryrequirements for the District Council given its long history of corruption, including by topleaders. Mr. Bilello might like to minimize the error by calling it procedural, but it is aprocedure facilitating core substantive goals of the Consent Decree and Stipulation and Orderand cannot be disregarded. Such conduct by Mr. Bilello in his role as EST, the highest official

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of the District Council, was serious and the veto was an expressly authorized invocation of theRO's Review and Oversight Authority under 5.b of the Stipulation and Order. We also notethat the RO did not em ploy the disciplinary process set forth in 4 [ [ 5.f of the Stipulation and Order,through which M r. Bilello could have lost his membership in the Union.

Mr. B ilello's argument that various individuals including the R O failed to alert him to theBylaw section is neither supported nor relevant. First, this is one of a num ber of examples w hereMr. Bilello is belatedly attempting to supplement the record w ith his May 23, 20 13 declaration.It is black letter law that the record cann ot be supplemented now, post the decision un der review.See Passero, Decision and Order at 4 (quoting Boatmen v. G utierrez, 429 F. Supp. 2d at 548).Moreover, it was Mr. Bilello's responsibility to run the Union knowing and adhering to theBylaws an d any other relevant rules. As to M r. Bilello's effort to shift blame to the RO, the R Ois not counsel to the EST or the D istrict Counc il. The various professionals to whom M r. Bilellotries to shift blame are not there to spoon feed the EST as to how to conduct his job. Theseprofessionals have different, specific missions. They gu ide, assist or support where they can, butthat does not place the primary responsibility for the ES T's job on them.

The other ground for the veto involving the District Council Bylaws involves Mr.Bilello's failure to review the Benefit Funds Board of Trustees' meeting minutes with theExecu tive Committee, which violated Section 10(L) of the Bylaws. M r. Bilello, as EST, w as co-chair and a Trustee of the Benefit Funds and attended the monthly Board of Trustees' meetingfor the Funds, at w hich important matters including the financial condition of the Fund s, lawsuitsinvolving the Funds and overall management of the Funds were addressed. Given his positionsas EST and a Trustee of the Fund s, it was incum bent upon M r. Bilello to review the minutes w iththe Executive Com mittee in accordance with Section 10(L) of the B ylaws. Mr. Bilello casts this

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as a good faith procedural governance error, see Bilello Br. at 1, and makes similar arguments ashe did with regard to his Section 21 violation. See Bilello Br. at 11-13.

As with Section 21 of the Bylaws, there is substantial evidence that Mr. Bilello failed tofollow Section 10(L) of the Bylaws and review the Benefit Funds Board of Trustees' meetingminutes with the Executive Committee. As noted, Investigator Mitchell reviewed the ExecutiveCommittee minutes for January 11, 2012. through March 26, 2013 and reported that "at no timedid [Mr.] Bilello discuss the minutes of meetings of the Board of Trustees of the Benefit Fundswith the Executive Committee." Mitchell Declaration at 4. Again, Mr. Bilello conceded that he

did not follow the Bylaw requiring him to review the minutes with the Executive Committee.See Bilello Br. at 12. Without question, Mr. Bilello failed to follow Section 10(L) of the Bylaws.

The RO's decision in this regard was not arbitrary or capricious. Following this Bylawand reviewing the Trustees' meeting minutes with the Executive Committee fosters thetransparency and accountability necessary to avoid corruption and maintain Union reform. Thelanguage in his declaration that he would have reviewed the minutes if he had been asked orknown it was required, that he discussed what he perceived to be the salient issues that had beencovered at the meetings, and that minutes of the meetings were maintained at the DistrictCouncil's office is not properly before the Court as previously noted, see Passero, Decision andOrder at 4 (quoting Boatmen v. Gutierrez, 429 F. Supp. 2d at 548), and, in any event does notsatisfy the Bylaw as Mr. Bilello himself seems to acknowledge. See Bilello Br. at 12. It wasimportant that Mr. Bilello follow Section 10(L) and inform the Executive Committee of mattersaddressed at the Benefit Funds Board of Trustees' meetings as a matter of democraticgovernance, a cornerstone of the Consent Decree.

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Ground 3 (Cross-training Program)Mr. Bilello claims that the veto ground based on his failure to continue the development

of the business representative cross-training program recommended by the RO and begun by theformer President runs counter to the process set forth in the Stipulation and Order and isunreasonable. See Bilello Br. at 1-2 and 13-15. Mr. Bilello miscomprehends the RO's authorityunder the Stipulation and Order and deems the RO's decision unreasonable when it was anappropriate response to Mr. Bilello's inaction over an extended period of time.

By way of background, after Mr. Bilello became EST, the District Council agreed to

create a cross-training program. In response to the slow pace of development andimplementation of the program, in his Fourth Interim Report of June 4, 2012, the ROrecommended that "the District Council should greatly accelerate implementation of an intensivetraining program to educate all business agents about all jurisdictions and CBAs." FourthInterim Report at 16-17. Investigator Mitchell followed up over the next several months to noavail, as represented in his Declaration and supported by emails. See Mitchell Declaration at 4and Exhibit L thereto. There is clearly sufficient evidence to support this veto ground under theapplicable standard. See Nee, 2012 WL 5236577, at *6; Passero, Decision and Order at 4.

Once again, Mr. Bilello improperly attempts to supplement the record with his May 23declaration, describing progress made toward a cross-training by the time of the Notice of Veto.See Bilello Br. at 14. Apart from the fact that this is not properly before the Court, see Passero,Decision and Order at 4 (quoting Boatmen v. Gutierrez, 429 F. Supp. 2d at 548), it is notable thatdevelopment of the program had not been completed by April 29.

Simply put, Mr. Bilello did not want to implement the program and acted (or failed toact) accordingly. As stated in his brief, "[i]n Mr. Bilello's view, which was shared among other

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DC officers, if such a program were to be employed, its purpose would not be to promote thesubstitution of generalists for specialized business representatives, but to improve understandingamong business representatives of the rules governing work assignments under the variouscollective bargaining agreements, thus fostering enforcement of such standards and enhancingthe representatives' ability to provide service in place of temporarily unavailable specialists."Bilello Br. at 13-14.

As the RO clearly stated when he recommended acceleration of the implementation ofthe cross-training program in his Fourth Interim Report, "a specialty business representative

should always be partnered with a non-specialty representative. Representatives should berotated periodically so that they do not become associated with or captive to a particularemployer." Fourth Interim Report at 17. This was a practical anti-corruption initiative, wellwithin the RO's authority under the Stipulation and Order. It was thus incumbent upon Mr.Bilello as EST to ensure that this program was created and implemented and it was reasonablefor the RO to find Mr. Bilello's inaction in this regard to be a basis for a veto.

Finally, Mr. Bilello's assertion that the RO should have acted under 5.h instead of 5.b.iii is unavailing. Under the authority clearly granted him by 5.b.iii and previouslyrecognized by this Court, see Passero, Decision and Order at 14, the RO properly reviewed Mr.Bilello in his position as EST and found that by not continuing implementation of the cross-training program for business representatives, Mr. Bilello was, inter cilia, acting inconsistentlywith the objectives of the Stipulation and Order. That the underlying conduct involved a trainingprogram is of no moment. Moreover, Mr. Bilello agreed to implement the program and thendelayed for several months. This action was properly and most expeditiously addressed by theRO utilizing his Review and Oversight Authority under 5.b.iii.

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CONCLUSIONFor all the reasons set forth above, the RO's veto of Mr. Bilello's service as

Executive Secretary-Treasurer of the New York District Council of Carpenters should be upheld.Dated: New York, New York

June 14, 2013

Respectfully submitted,

Bridget M. RohdeMintz Levin66 Third AvenueNew York, NY 10017Attorney for the Review Officer,Dennis M. Walsh

cc:Guy Petrillo and Daniel Goldman (email and U.S. mail)Petrillo Klein & Boxer655 Third Avenue, 22n d FloorNew York, New York 10017AUSAs Benjamin Torrance and Tara LaMorte (email and ECF)U.S. Attorney's Office, Southern District of New York86 Chambers Street, 3r d FloorNew York, New York 10007James M. Murphy (email and ECF)Spivak Lipton, LLP1700 Broadway, Floor 21New York, New York 10019

Raymond McGuire (email and ECF)Kauff McGuire & Margolis LLP950 Third Avenue, 14 t h FloorNew York, New York 10022


6-14-13 bridget rhode memorandum of law to judge berman doc 1333

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