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U.S. v. LOCAL 1804-1

United States District Court, Southern District of New York

May 27, 2003


The opinion of the court was delivered by: John Martin, District Judge.


In an Order dated January 30, 2003, the Court appointed Robert J. McGuire as Administrator of Local 1588 and authorized him to employ others to assist him in the performance of his duties. The Order provided that the Administrator should submit monthly bills for services to the Court with copies to counsel for the ILA, who were given two weeks to object to any portion of the bill.

By letter dated April 8, 2003, counsel for the ILA advised the Court that the ILA objected to certain portions of the Administrator's bill, submitted to the Court on March 26, 2003. Although not objecting to any of Mr. McGuire's charges, the ILA objected to certain of the time charges of Robert Stewart, the Deputy Administrator appointed by Mr. McGuire.

The ILA notes that the Local has a treasury of $344,422 and that Mr. Stewart's bill for a five week period was $42,451.60. The ILA specifically objects to portions of Mr. Stewart's bill for what it claims are time spent commuting and time charged in excess of 8 hours on any weekday and any time charged on weekends.

The Court has received responses to the ILA's letter from the Government and Mr. McGuire both of whom support the full payment of Mr. Stewart's bill. Having considered all of the submissions, the Court overrules the objections of the ILA and authorizes Mr. McGuire to pay Mr. Stewart all amounts billed.

At the outset, it should be noted that the Court and the Administrator are concerned about the impact of the cost of the Administrator's supervision on Local 1588. Mr. McGuire is billing his time at less than the hourly rate he charges for commercial matters. One of the reasons he appointed Mr. Stewart was to have someone who could perform many of the tasks assigned to the Administrator at a lower hourly rate than Mr. McGuire would charge if he performed the work himself. Given Mr. Stewart's background and experience, his rate of $175 per hour is extremely reasonable.

Mr. McGuire's letter indicates that he has carefully reviewed Mr. Stewart's bill and believes that all the time charges are reasonable and that Mr. Stewart is performing in a highly efficient manner. Mr. McGuire notes that Mr. Stewart is not billing for time spent commuting from his home but is following the general practice of lawyers of charging for time spent traveling from his office to his client's premises. A lawyer who has to spend time traveling on his client's business is entitled to be compensated for the time since he could otherwise have spent it doing other billable work. As the Government notes, Mr. Stewart should be commended for spending nights and weekends on this important matter and not penalized as the ILA proposes.

It should also be noted that, while all reasonable efforts should be made to minimize the financial impact on the Local, its finances are not as dire as the ILA would have the Court believe. Mr. McGuire has advised the Court that the Local has $709,978.23 in its accounts and a projected income of $650,000 for 2003. Given the fact that for approximately nine years the Local's officers were paying large amounts of the Local's money to organized crime figures, it is not unreasonable for the Administrator to spend appropriate amounts to ensure the membership that the Local's funds will not again be used for such a purpose and to ensure that they will be represented by people whose only interest is in providing the membership with first class representation.

The ILA objection to the Administrator's hiring of Thomas Gallagher is also overruled. Mr. Gallagher was hired by the Administrator to perform administrative duties that were performed by John Timpanaro who was paid $124,000 per year as President of the Local and whose services were terminated by the Administrator. The Court finds no basis to question the judgment of Mr. McGuire that he requires Mr. Gallagher's assistance and that his compensation is appropriate.

Finally, the ILA argues that it is not the appropriate entity to review the Administrator's bills and suggests that these bills should be distributed to the membership. However, the ILA came into this Court to oppose the Government's application for the appointment of an Administrator stating that it was the appropriate party to protect the interests of the membership. The ILA is free to distribute Mr. McGuire's bills to the membership if it considers that appropriate but the Court sees no reason why the ILA is not the appropriate party to act for its membership in this regard. However, given the ILA'S stated reluctance to review these bills, the Administrator is now directed to also furnish copies of all his bills to the Assistant United States Attorney in charge of this matter.

By letter of April 23, 2003, the ILA also objects to certain portions of the charges submitted by Mr. Gallagher. The Administrator is directed to respond to the ILA'S letter by May 9, 2003.



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